A year ago there was a sense of cautious optimism across manufacturing. A solid start to the wider economic recovery in 2010 was expected to continue although a number of risks and uncertainties continued to linger on the horizon.
Key amongst these were ongoing challenges accessing lines of credit, rising and volatile raw materials prices, the impact of UK government spending cuts and question marks over the sustainability of recovery in the UK’s main markets.
Manufacturers successfully navigated a host of hurdles throughout last year, including the unforeseen and temporary disruptions to supply chains caused by natural disasters and geopolitical tensions. And with that, the sector posted its second year of above par growth in 2011. While there is, however, some ground that was lost during recession still to be made up, some sectors such as transport, machinery and food are nearly operating at pre-recession levels of output.
Trade was a particularly strong story through 2011. An increased emphasis on exporting to new markets was identified as a key priority for UK manufacturers in EEF’s Shape of British Industry research1. And official statistics suggest that UK manufacturers have delivered – last year marked a record high for goods exports in October, with non-EU market demand performing particularly strongly. These market entry strategies have been underpinned with an ongoing focus on productivity and innovation across products, processes and services. But they may, in many cases, have been hampered by difficulties in finding the right skills and problems with the availability of inputs and raw materials.
Our new survey of manufacturing executives clearly shows that these opportunities and challenges will be recurring themes in the year ahead.