Manufacturing roundup: UK manufacturers anticipate downturn but hydrogen on the up

Thu 28 Sept 2023
Posted by: Benjamin Roche
Trade News

Net zero has had some manufacturers all tangled up this month, as prime minister Rishi Sunak announced shifting electrical vehicle targets. Meanwhile, industry has been confronting a slowdown in activity as economic conditions continue to bite — though the UK has leapt one place up the league table of manufacturing nations.

‘Anaemic at best’

A survey by Make UK, relayed by The Guardian, found that manufacturers are “seeing a very sharp slowdown in activity”, according to the group’s policy director Verity Davidge.

She attributes the shift to “the potent cocktail of rising interest rates, cost of living and slowing overseas markets”, adding:

“As a result, [manufacturers] are now battening down the hatches in the expectation that the next year is going to be anaemic at best and, potentially, much harder.”

The downturn is mirrored in China, where Reuters reported yesterday (27 September) that the country’s industrial firms have seen an 11.7% fall in profits over the last year.

There was, however, cause for optimism among manufacturers in the Chinese National Bureau of Statistics (NBS) data, with raw materials manufacturers seeing improved levels of demand.

Involving manufacturers in trade

Make UK wasn’t all doom and gloom this month. This week, it issued its ‘Makers’ Manifesto 2024’, which outlines how the organisation believes UK manufacturing can achieve key goals, including net zero carbon emissions by 2050.

The manifesto also targets workforce sustainability and provides a top-ten list of the world’s largest manufacturing economies. The UK is the eighth-largest manufacturing economy in the world, up from ninth as it recently leapfrogged France, also noted by Make UK this month.

On that milestone, Paul Brooks of the IOE&IT said:

“The UK’s much-maligned manufacturing sector is, in reality, a driving force behind our economy.

“With output of £224bn, and supporting 2.6m highly skilled and high paid jobs, it is encouraging to see us as the eighth biggest manufacturing nation globally.”

A renewed focus on growth in international trade is crucial to taking the next step, Make UK’s manifesto argues. It states:

“Government needs to develop an international trade strategy that allows… relevant stakeholders to inform policymakers of technical and non-technical barriers to trade.”

It calls for manufacturers to be given a part in the planning and priority-making that goes into trade deal negotiations.

There is also a call for a programme of support for firms that export, both large and small, while “barriers to trade must be reduced”. The organisation notes that manufacturing is the country’s largest individual export producer, producing £290bn of the £381bn of goods exported in 2022.

Industrial strategy urged

Manufacturers in the UK have been reacting to the news of prime minister Rishi Sunak’s announcement this week that his government are pushing back a ban on sales of new internal combustion engine cars from 2030 to 2035.

In a letter to the FT, leaders of manufacturing bodies Make UK, the Construction Equipment Association and the Chemical Industries Association, said the change was “a timely reminder that the UK needs a long-term industrial strategy”.

“Such a strategy must survive short-term political cycles and instability through a mechanism such as a Royal Commission.”

The Manufacturer reports, meanwhile, that director of policy at the Institute of Engineering and Technology, Christopher Knibb, responded to the changes by saying:

“We need government to provide clarity and certainty that we can work towards… We need to stop seeing the targets as a burden and start seeing the opportunity of wider benefits to society and the economy.”

UK-Germany hit on hydrogen deal

Green manufacturing did see a boost this week, however, as the UK and Germany signed an agreement intended to “accelerate the development of an international hydrogen industry”, says the government.

The two governments have committed to “significant investment” in hydrogen energy. The UK has allocated £240m to the Net Zero Hydrogen Fund, while Germany has provided funding from its Climate and Transformation Fund to develop the technology.

UK minister for energy efficiency and green finance, Lord Callahan, said:

“This agreement will underpin the development of this new fuel not just for our respective countries but also for an international trade that could be transformative in our work towards achieving net zero emissions by 2050.

“It is through these partnerships that we can move away from expensive fossil fuels—and in doing so boost our energy security.”