EEF – the UK’s major manufacturing body – today released its Executive Survey results for 2018, indicating expectations for the year ahead.
Released in partnership with AIG, the survey looks at the growth opportunities and challenges for the year ahead in the manufacturing industry. Despite the survey indicating continued concerns around Brexit, there was a positive outlook for UK exports in 2018 as well as predictions of continued global economic growth.
Positive sounds around UK exports fuelled by global growth
Respondents suggested that exports should do well this year, with 47% expecting higher orders from the EU and 51% from non-EU customers. This mirrors overall economic trends that show increased exports to non-EU markets partly due to the UK government’s ambitions to make the most of increased global demand and partly due to the fall in value of the pound.
This follows manufacturers apparently underestimating growth of the global economy at the start of 2017. There was growth in Europe, accelerated growth in emerging markets, and resilience in the US economy. This helped 2017 to be a strong one for exporters and international supply chains.
In the last Manufacturing Outlook report EEF released in 2017, it was reported that 81% of manufacturers now see improved demand conditions in at least one major overseas market. The same report suggests that exports are on track for double-digit growth in 2018.
Brexit still a concern...
Brexit continues to be a concern for EEF members. Survey respondents said that the following Brexit-related risks are having an impact on their plans for 2018:
- Significant upward pressure on input costs
- Significant movements in exchange rates
- Significant economic volatility in major market(s)
- Increase in EU workers leaving our business
- Relocation of major customer(s) from the UK
The number of companies airing concern around input costs has increased slightly since the same survey last year. Interestingly though, the proportion of those relating input costs concerns to Brexit has decreased slightly.
Concerns around currency continue to be largely based on fluctuations caused by developments in UK politics.
It’s not all about Brexit though
The risks identified by UK manufacturers are not all to do with Brexit, however. Disruptions due to cyber attacks, upward pressure on pay settlements, and insufficient capacity within the business to meet demand have also been raised as high-impact concerns.
Additionally, seven in 10 firms raised economic volatility in a major market as a risk to their plans for 2018.
In terms of the activities that manufacturers are prioritising this coming year, 86% said they are focusing on process innovation and efficiency improvements.
The report identifies the new ‘fourth industrial revolution’ as a significant factor in respondents’ strategies for growth this year. 72% are also looking at increasing the level of automation in their production processes and the same level are looking at improving the way they work with their supply chains to improve flexibility and responsiveness.