5 Key Takeaways from Make UK’s 2024 Executive Survey

The government signalled a changing approach to manufacturing in their Autumn Statement. With the expansion of full expensing and a general shift in rhetoric, it was clear that the industry accounting for 10% of GDP was back on the agenda.

This had a ripple effect on the overall outlook of manufacturers. According to the survey, 44% of manufacturers expect improvements in the industry. A further 30% of manufacturers predict that disruption to supply chains will improve.

However, manufacturers are aware that the challenges leading to pessimism in the previous year haven’t entirely disappeared. Labour shortages continue to be a concern – more than a third (34%) of manufacturers say they worry about access to domestic labour in 2024. And though supply chains have improved, local and global pressures mean they’re as squeezed as they’ve ever been.

If there’s one thing manufacturers know how to do well, it’s adapting to change. And true to form, this is what many of them have been doing over the last year. Over half of manufacturers (52.7%) are looking to expand their product portfolios into new areas. There’s also a focus on digitalisation, with a quarter of those surveyed (23%) saying they see specific opportunities here. These include reduced costs, increased innovation, and even a boost to workplace safety.

However, though there’s a definite appetite for capitalizing on these opportunities, manufacturers’ knowledge doesn’t align. Make UK’s survey found that only 12.5% are making digital tech central to their strategies. This can be linked with the lack of technical skills, and cultural resistance to bringing in new technologies. These can only be properly harnessed if manufacturers know how the tools available can help their own process.

Takeaway #3: Costs Are Still Rising

Costs cropped up throughout the survey. As well as energy costs continuing to rise amid the rolling back of bill support schemes, almost half of companies said that pressure on input costs was a major risk to them in the next year. However, ONS data does show that, across inputs and outputs, producer prices have been falling quickly. Input inflation, for example, was down 2.6% in the 12 months to October 2023.

And though Brexit was officially completed at the end of 2020, manufacturers are still feeling its impact over 3 years later. More than 1 in 5 manufacturers (22%) say that costs have increased due to now having to meet EU regulations, such as REACH, risking growth as a result.

Perhaps this is obvious – but in 2024, manufacturers have signalled that they’ll place even more focus on both what they make, and who makes it for them.

With domestic and overseas recruitment both struggling, companies are looking inward, at their current workforce. 60% of them have said they’re planning to invest in upskilling, making sought-after skills available in-house.

Despite all the buzz about new technologies, it’s important to note that a lot of the upskilling we’ll see this year will also be based in line management and people skills. This indicates that these more traditional skills still hold a crucial place in the modern manufacturer’s toolkit.

What ties together all of the above statistics is this: whether or not they can be fulfilled is largely out of manufacturers’ hands. This is again backed up by the data – 48% of businesses will hold back on investment until they see policy certainty. On the other side, 1 in 3 firms say Government incentives (like full expensing) were crucial to decisions to invest in their businesses in 2024.

In the 2023 Executive Survey, almost half said the UK wasn’t an attractive place for non-UK businesses to invest in. This perception seems to have shifted in the year since: more than half (52.7%) now see the UK as a more competitive place for manufacturers. This is even in comparison to neighbours Germany and France (31% and 30% believe we’re moving ahead of them, respectively).

This year’s survey also took a specific look at full expensing. Made permanent by last year’s Autumn Statement, this was heralded as a policy for the long term – and it certainly chimes with how businesses operate. 60% of manufacturers invest in plant and machinery every two to eight years. Full expensing, then, could be an opportunity for investment that government policy has so far ignored.

The new policy also boosts the UK’s standing globally. According to the Tax Foundation, full expensing makes the UK the fifth most generous country in the OECD in terms of how it treats capital investment for tax reliefs.

However, in a nod to the fact that all countries are continuing to bounce back after the economic shocks of COVID-19, a majority of companies surveyed still saw the UK as less competitive than India and China.