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British manufacturers and engineers target growth despite concerns over EU exit plans

25 October, 2016

British manufacturers and engineers are optimistic of their future growth prospects, but are cautious of the impact leaving the European Union could have on their plans, according to a new survey from MHA and Lloyds Bank Commercial Banking.

The fifth annual survey asked over 550 small to medium sized manufacturing and engineering businesses from across the UK for their views on the challenges and opportunities facing the sector.

Over two thirds (69%) of businesses questioned are optimistic about their growth prospects in the coming 12 months. However, a note of realism was struck in relation to concerns over the way negotiations over the country’s exit from the EU will go, with over a third of businesses perceiving this uncertainty to be a barrier to growth.

After the referendum, the biggest cause for concern was the skills gap. Nearly half (47%) of businesses are hoping to recruit over the next 12 months, an increase of eight per cent over 2015, but the inability to find skilled staff to do the job remains a major problem for over two thirds (71%) of those firms.

Over 90% of companies believe that their production costs will rise in 2016/17 due to the increasing cost of raw materials together with higher wages. As a result, productivity gains are being seen as important in bringing down costs, as almost three quarters (71%) won’t be passing the additional costs onto their customers.

Securing opportunities to trade globally remains a priority for manufacturers, with 65% of businesses exporting, up three points on 2015. The Eurozone remains the most popular trading partner for British firms, followed by North America and Asia.

Industry 4.0 is building momentum, but the growing trend towards sophisticated automation and data exchange in manufacturing technologies is a principle that almost three quarters of the survey respondents didn’t understand. This suggests that more work needs to be done across the sector to make sure manufacturers are aware of the opportunities that automation presents.

Chris Coopey, head of manufacturing at MHA, commented: “Our latest survey demonstrates that the manufacturing and engineering sector remains innovative and resilient despite the uncertainty around the upcoming European Union exit negotiations. It also shows that much can still be done to help UK industry increase its global market share and offset the trade deficit.”

Dave Atkinson, head of manufacturing at Lloyds Bank Commercial Banking, added: “While the result of the EU Referendum has left manufacturers with some questions over how they will fulfil their future plans, many are actively identifying new opportunities with global trade partners to help deliver sustainable growth.”

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