There is little doubt that UK manufacturing is facing its most challenging time for several decades. The rapid downturn in activity in automotive, metals and other key sectors will have significant knock on effects across UK manufacturing. The economic outlook across the world has deteriorated rapidly and significantly and there remains a great deal of uncertainty around how the current crisis will play out and how enduring the downturn will be. However UK manufacturers have been working hard in recent years to reshape their business strategies and will enter this period of economic turbulence in a stronger position than they have in the past.
In recent years the proportion of manufacturers offering services alongside their products has been on the increase.
Companies are offering customers additional value, from customer training and maintenance to end-to-end manufacturing solutions. There are clear benefits on both sides.
Customers receive a seamless service from one company, which may involve everything from design right through to installation and disposal. Service providers gain from a more diversified revenue stream and a distinct competitive advantage, particularly against lower-cost producers.
Similarly, we have seen more companies move into niche markets. Although traditionally associated with smaller companies, our research shows that this can be just as applicable to some product lines of large companies.
Effective and innovative production processes and a focus on designing for customer specifications are key to being niche.
Importantly, companies have matched these new strategies with significant investment in new equipment, better skills and continuous innovation. But will this be enough to keep UK manufacturers ahead of the competition and carry them through the economic storm ahead?
Manufacturing has demonstrated its responsiveness in the face of rapidly changing global economic challenges in recent years. But UK manufacturing will need to respond again to the current challenges in terms of market positioning and cost base in order to maintain all important cash flows. Companies that have established or can quickly develop the service and niche positions outlined in this report will be well placed to come out of this recession in better shape.