By Scott Kirkpatrick, F1 manufacturing
If the health and wealth of the domestic manufacturing industry is usually considered a reliable indicator of the state of British industry, then the prognosis for 2015 looks pretty encouraging. Whilst growth has slowed a little in recent months, the demand for British made products is continuing to rise in many sectors as companies look to source components and materials closer to home.
This point of view is supported by the CBI’s quarterly Industrial Trends Survey to July 2014 which reported that domestic orders had risen at their fastest pace since 1988, with employment in manufacturing also on the increase. Furthermore, many companies stated that they expect to continue growing over the current quarter and into next year.
As a specialist engineering company, our own experience supports the findings of the CBI in that we have noticed a significant rise in demand from British manufacturers. So why is this?
We have found that our customers are placing an increased emphasis on high quality products and fast turnaround times. Margins were exceptionally tight for many clients during the economic downturn, but with rising confidence and increasing orders, products that were once sourced abroad are increasingly being bought within the domestic market.
British manufacturing has a well-deserved reputation for quality which largely stems from having access to a skilled workforce. Although the number of people employed in the industry has steadily decreased over the past 30+ years (a 60% drop since 1978), productivity has risen significantly. We can also boast of a more highly qualified workforce than many other countries. The most recent Office for National Statistics Quality Adjusted Labour Input (QALI) reported that the quality of labour in the British manufacturing industry has steadily increased, and that the improvement for the manufacturing sector is at a higher rate than for almost any other industry.
The benefits of buying ‘local’
There are other important benefits of buying from the domestic market:
Reducing your carbon footprint – companies are increasingly being encouraged by the government and the EU to reduce any negative environmental effects created by their supply chain. Sourcing products closer to home is inevitably more environmentally friendly than shipping goods from Africa or the Far East for example due to the amount of CO² and fuel usage involved in the transportation process.
A sense of history – manufacturing has been a core industry in the UK for centuries. As a result, we have developed a generational skills base with an established heritage in most sectors.
Quality control – British manufacturers have a very strict approach to quality not always shared by countries further afield. Products are usually finished to a higher standard, whilst domestic manufacturers also rank well for fast turnaround.
Is outsourcing out of fashion?
Outsourcing was seen by many as a viable alternative when margins were at their tightest. However, increasing output has given companies the financial confidence to place quality above price. Whilst cost will always be a significant factor, companies appear to be moving away from outsourcing as a practice, preferring to maintain a greater degree of control and influence over the end product than outsourcing traditionally allows.
Investing in technology
Staying abreast of changes in technology is vital if the UK is to maintain its reputation for quality. This means making an ongoing commitment to research and development. Although the manufacturing industry invests more in R&D than any other sector, accounting for 72% of activity in 2012, some organisations were reluctant to allocate money to R&D during the economic downturn. However, with manufacturers experiencing a steady growth, the appetite for innovation appears to have returned. This will be a crucial step in maintaining our position within the global market.
The growth we have seen since the start of the year is predicted to continue well into 2015. This is good news - not just for manufacturers, but for the UK economy as a whole. After all, when manufacturing is thriving, everybody benefits.