UK manufacturers ‘quietly confident’ over 2017 prospects

The UK's manufacturing sector appears confident that, despite unpredictable economic conditions, it can deliver long-term growth strategies in 2017, according to a new survey.

UK manufacturing
The annual survey of almost 300 executives in the sector by the manufacturers' organisation EEF says that companies expect investment to pay off in terms of productivity and sales.“With 2016 now over, the new year ahead promises to bring its own set of fresh challenges – Brexit, Trump presidency and elections in Europe to cite a few. Yet through these uncertain times, manufacturers remain focused on delivering ambitious growth plans in 2017,” EEF said.“There is an emphasis on innovation as a means to boost productivity and enhance competitiveness. Manufacturing plays a key role in the UK innovation landscape and this effort is expected to strengthen in 2017, with firms engaging in process innovations, introducing new products to the market and embracing fast-moving changes in technologies – as part of the 4th industrial revolution.“While the slowdown in world trade is still looming large, UK manufacturers are far from apprehensive and four in ten survey respondents say they will be diversifying into new export markets in 2017. Manufacturers are realistic about how difficult this might be, and three-fifths cite it as the most challenging action to deliver in 2017.

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EEF said the results of the survey showed that companies felt “quietly confident” about the year ahead.Terry Scuoler, EEF chief executive, said, “Global political upheaval means that 2017 looks set to be another bumpy ride, with manufacturers forced to navigate uncertainty, unpredictable economic conditions and a number of risks that have been amplified by Brexit.“Against this backdrop a smooth journey is far from guaranteed, but firms are strongly attuned to the challenges and remain fully focused and determined to deliver on their long-term plans for growth.“With a new digitally-driven industrial era on the horizon and everything to play for, this long-term vision and focus is vital – despite the peaks and troughs manufacturers cannot afford to be diverted away from where they need to be.“In many ways 2017 is likely to be another unprecedented year of change and uncertainty, but the UK manufacturing sector remains ambitious, resilient and adaptable.”The survey showed that about half of manufacturers expect an improvement in terms of productivity during the year and that, while companies were realistic about UK and global economy conditions, “sales expectations remain in the black" both for domestic sales and exports.“Yet it won’t be plain sailing and manufacturers are realistic about the challenges ahead. This year, almost half of manufacturers see more risks than opportunities, and this proportion is higher than the last couple of years,” said EEF.“On top of manufacturers’ concerns are sterling movements, which will pose the most significant threat to companies going into 2017. This reflects the potential impact from the pound depreciation and volatility on business costs, pricing strategies at home and abroad and, ultimately, profit margins.“In addition to the sterling depreciation, the recovery in oil prices from a protracted two-year slump will heighten upward pressures on input costs. Putting the EU referendum to one side, extension in payment terms continue to pose a threat to manufacturers, particularly those in the upstream sectors such as the metals industry.”

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