Concerns over trade and the attractiveness of the UK for investment are key concerns for manufacturers in 2021 but many are confident about their prospects, according to a major survey.
Just over 200 UK manufacturers were asked what they believed the key risks were for their business over the next 12 months as part of the 2021 Make UK Executive Survey.
Unsurprisingly, concerns over EU trade were the biggest worry for many respondents, with a third believing that investment prospects and the ability to attract international talent will suffer now that the UK has left the EU. Just over a quarter (26 per cent) also said they believe exports to the EU will fall, compared to 16 per cent believing they will increase.
The biggest perceived risks to companies in 2021 were customs delays (47 per cent), followed by COVID-19 lockdowns (46 per cent), increased costs of regulation (39 per cent) and the relocation of major customers out of the UK (14 per cent).
Despite these concerns, around half of respondents (48 per cent) said they expected to see an improvement for manufacturing in 2021 overall. Just over half (51 per cent) said the opportunities of 2021 outweigh the risks for their business, with just 27 per cent saying the opposite.
Nearly six in ten respondents (57 per cent) said they were investing in new product development, with a similar number also planning capital investments - both of which encompassed a notable commitment to digital technologies.
Stephen Phipson, Chief Executive of Make UK, said:
“The transition to new trading arrangements with the EU was always going to be the biggest challenge facing manufacturers this year and the fact we have an agreement in place doesn’t alter that. However, just as the sector rose to the challenge of aiding the national effort at the start of the pandemic, it is clearly set to do so again as we re-build the economy and take advantage of the opportunities from digital technologies.”
In terms of trade, around a quarter of manufacturers said they were looking to re-shore activities and identify new or additional suppliers in the UK. Three in ten are also planning to enter new markets over the next 12 months, with almost 40 per cent looking to expand sales to non-EU markets such as Asia and the United States.
Cara Haffey, Manufacturing and Automotive Leader at PwC UK, which supported the research, said:
“I found it heartening to see that so many respondents are focusing on strengthening business resilience by investing in their people and diversifying their trade models in 2021. UK manufacturers are resilient by nature and, with the right investor and government support, their agility and drive will enable them to build new trade networks and embrace the clean, green digital revolution, ensuring the UK remains a go-to destination for many more years to come.”