2018/19 MHA Manufacturing and Engineering Report

UK SME manufacturers and engineers remain optimistic and confident about future growth, despite the uncertainty surrounding Brexit, rising production costs and skill shortages.

Drawing on national and regional insight from over 200 clients and contacts, the findings of our recent survey identifies opportunities and concerns facing UK manufacturing and engineering businesses.

The respondents were from a variety of sub-sectors within manufacturing and engineering including aerospace, automotive, agriculture, biotechnology, chemical, construction, electrical and electronic, food and drink, healthcare, leisure, metals, minerals and materials, oil and gas, pharmaceuticals, renewables and transport, to name but a few.

The report details the national findings (covering England, Wales and Scotland) and also highlights interesting regional variations. Sector expert Matt Rooney, Engineering Policy Adviser at the Institution of Mechanical Engineers, has provided commentary throughout the report.

Read the full report

National findings

The report identified some key findings within the sector:

  • 71% of manufacturers reported revenue growth in the last year and 78% predict business growth over the next 12 months;
  • 51% have high or above average business expectations over the next 12 months (increasing to 54% over the next three years) and 50% are looking to increase their capital investment spend in the coming year;
  • 58% of respondents export products and all exporters currently do so to the Eurozone;
  • 93% believe their main competitors are based within the UK and 35% agree they’re within their own region;
  • Only 30% cite Brexit uncertainty and trading tariff concerns as their main barrier to future success and just 34% have a strategy in place for post Brexit – 66% feel they cannot plan for the impact until they know the Government’s strategy and EU response;
  • 92% believe rising production costs will impact their business next year, but in a positive move, 67% intend to absorb any price increases, rather than pass them onto customers, and 52% intend to achieve this through improved productivity and efficiency;
  • Staff recruitment is an equally big issue; 81% of respondents report problems in finding people, yet 49% expect to increase payroll numbers next year. Out of these, 63% will opt for apprentices.

South Coast findings

Optimism around turnover growth over the next 12 months was slightly lower than the national figure, with 60% of businesses predicting growth. Retention and recruitment is an even bigger issue this year than last year, with 89% of respondents finding it difficult to recruit staff and over a quarter (27%) already losing staff to the Brexit effect (the national figure is 20%). Anecdotally, although not specifically covered in the survey is the growing concern around the lack of availability of commercial/factory space for both new and expanding businesses in the region. The survey again confirms that the message around R&D tax credits is still not being heard by enough businesses which is a frustration, given the scope of the relief available.

If you would like to discuss any of the issues raised in the report in the context of your business, please contact one of our team on 01903 234094.