by Michael Thomas, Partner of Manufacturing Practice
As we start the year in earnest, I feel optimistic. That’s such a great thing to be able to say in January!
Things aren’t just looking good for manufacturing. They’re looking really good.
The industry ended 2017 in a buoyant position. It had been a steady year of technological advances and organic expansion, and yet 2018 has already given me and others connected to the sector, even more to smile about.
Figures just published by the Office for National Statistics shows UK manufacturing output is growing at its fastest rate in nearly a decade, with expansion for a seventh consecutive month to November.
For only the second time in 20 years, manufacturing growth outpaced services with factories growing at nearly twice as fast as service firms, according to official data.
Lee Hopley, chief economist at manufacturers’ organisation EEF, has said:
“Manufacturers’ expectations for the year ahead point to output and export growth being maintained through this year on the back of continuing support from a burgeoning global economy.
“This, together with an ongoing commitment from government to deliver on its industrial strategy, will be crucial in helping to propel the sector forward.”
As we start the New Year, this is excellent news for the sector and the jobs market. Manufacturing now accounts for 10% of the UK production output and its economy, meaning demand for Executive Leader, Director, and Management positions is high.
So, to what do the experts attribute this growth? It would seem there are a few influences at play.
A cheap currency is one factor cited as helping Britain’s Manufacturing sector right now. The drop in pound sterling following Brexit has made UK exports far more competitive.
Transportation is a significant growth area covering boats, planes and cars; there has been a 10% production increase in ships, aircraft, and trains since the Brexit vote. Companies such as Rolls-Royce and Airbus are apparently working around the clock to keep up with orders.
The debate continues around whether the expansion in UK manufacturing proves the Brexit cynics overly pessimistic, but whatever the future brings, for now, its impact here is positive.
A recovering global economy is also having an effect. According to a report from the Financial Times, “global growth, rather than a weaker pound, is driving UK factories.”
The FT states that as the world finally begins to move on from the financial crunches of 2008, 2011, and the fall in commodity prices in 2014, a global-economic bolstering is assisting Britain in the export of more services and goods to the rest of the world. Most importantly, USA, China and Europe are all performing strongly at the same time.
Growth in investment spending is contributing to this current boom in UK Manufacturing. The statistics show an 8% rise in equipment and machinery production from June 2016 to the third quarter of 2017.
Likewise, the production of investment goods such as computers has risen by 8% and electrical assets by 4%. This trend isn’t just seen in the UK though.
According to the purchasing and supply management executives in the December 2017 Semi-annual Economic Forecast, economic growth in the United States will continue in 2018 too. As published by the Institute for Supply Management in December:
“Expectations are for a continuation of the economic recovery that began in mid-2009 […]. The manufacturing sector is optimistic about growth in 2018, with revenues expected to increase in 16 manufacturing industries, and the non-manufacturing sector indicates that 17 of its industries will see higher revenues.
“Capital expenditures, a major driver in the U.S. economy, are expected to increase by 2.7 percent in the manufacturing sector and increase by 3.8 percent in the non-manufacturing sector. Manufacturing expects that its employment base will grow by 1.2 percent, while non-manufacturing expects employment growth of 1.5 percent.”
Expansion in renewable-energy initiatives and an upsurge in energy supply after a cold spell in November,have also contributed to recent growth.
According to economist Kallum Pickering at Berenberg:
“Cheap energy could be a major boon for UK manufacturing, and you could argue that the north of England […] would be a prime place for new manufacturing businesses.”
As an Executive recruitment firm, TS Grale already has a mission to ‘promote Manufacturing as a sector of choice, supporting management and executives in hiring and attracting the best talent across the market.’
It looks like 2018 could be a fantastic year to shout about the Manufacturing industry and the many and varied career paths and progression opportunities within it!
What are your thoughts on the current growth in UK Manufacturing?
Are there other factors at play, and will this trend continue?
How does it relate to the rest of the world’s manufacturing?
We’d love to hear your insights from industry.