General Industrial News, January 2018

Britain’s manufacturers are set to benefit from a boom in overseas demand this year, with companies said to be more optimistic about the prospect for the global economy than at any time since 2014, new research by EEF and AIG has shown.

 

The balance of companies expecting an improvement in global conditions has reached the highest level in four years, the 2018 EEF/AIG Executive Survey has shown.  More than 40% of companies expect trading conditions to be better than last year, compared with 14% predicting world growth would be slower than in 2017.

 

The optimism for the global economy contrasts, however, with the outlook for the UK market with more manufacturers expecting a deterioration in the UK economic conditions for the second year running.

 

The confident mood among industry executives is reflected in improvements across all firm level indicators in the survey – from sales to UK and export customers, to job numbers and profit margins.

 

The balance of companies expecting to see an increase in all the firm level indicators is positive for the first time in three years, with the responses improved in every case on a year ago.

 

According to the survey, this mood is tempered however, by the continued upward trend in the proportion of companies who see more risks than opportunities in the year ahead, with half taking this view, double the number of companies who see more opportunities.

 

Risks related to the UK’s exit from the EU will continue to dominate in 2018, with concerns about the effects of rising input costs, loss of EU staff, exchange rate volatility or a disruption in a major market continuing to cast a shadow over an otherwise buoyant outlook.

 

However, far from being blinkered by Brexit, manufacturers have other risks on their radar, including their exposure to cyber breaches, with over six in ten saying that disruption due to a cyber-attack was on their risk radar for the year ahead.

 

Other risks identified include the capacity implications of subdued investment and other international ‘what ifs’, including an increase in protectionist sentiment in the Unites States.

 

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New research conducted by EEF has shown UK manufacturers are very optimistic about growth in 2018. However, there is a growing concern among manufacturing organisations regarding the Post-Brexit skills shortage.

 

The EEF poll saw British manufacturers be more optimistic about the global economy in the coming year than any time since 2014 due to a stronger growth in key export markets.

 

A significant conclusion of the research was that only 7% of the companies surveyed are planning to move production to the EU and 6% to a non-EU location, but on the other hand a slightly greater proportion (12%) are planning to move production back to the UK.

 

However, despite the optimistic outlook on 2018, several industry organisations are concerned about the expected skills shortage in Post-Brexit UK.  The need to address Britain’s skills shortage that has arisen through years of production offshoring and resulted in a decline in specialist workforce know-how and formal training provision.

 

British manufacturing organisations are in a strong position to win important new contracts with their ability to offer superb quality with fewer supply chain concerns, but they must first be prepared with the staff and equipment to deliver.

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