"Make UK," formerly known as the Engineering Employers' Federation (EEF), is a the leading representative organisation for UK manufacturing companies. It plays a key role in promoting and supporting the manufacturing industry within the United Kingdom.
Make UK have just released their 2024 executive survey results, in which they asked UK manufacturers their thoughts on the state of the industry in 2024. This blog will summarise the key points, including where manufacturers see their biggest opportunities and challenges, and their growth and investment plans for the future.
Optimism for Growth in 2024
Firstly, it's important to note that the overall consensus from UK manufacturers is that 2024 will be a much more positive year. Despite a tough few years following COVID-19, manufacturers believe that "the opportunities outweigh the risks", and the industry is set to see significant growth.
This optimism stems from a blend of favourable economic policies, technological advancements, and a recovering global market. A stand out autumn Government statement includes permanent full expensing, the rollout of the Made Smarter programme and a fund to increase engineering apprenticeships.These are all extremely positive developments for the sector, and businesses are ready to capitalise on these emerging opportunities to expand and grow.
Innovation through New Products
The survey highlighted that with an impressive display of ingenuity, more than half of UK manufacturers are gearing up to launch new products in 2024. This surge in innovation is a response to evolving consumer demands, competitive pressures, and technological breakthroughs.
Organisations understand that in order for them to stay ahead of the competition, they need to keep evolving and expanding their product lines. From cutting-edge electronics to sustainable materials, these new products are set to redefine market standards.
Increasing Awareness of Digital Technologies
Another finding by the make UK team is that there is an increasing awareness of the transformative impact of digital technology. Manufacturers understand that in order to compete, they are going to have to invest in Artificial Intelligence, the Internet of Things, and robotics. These technologies can revolutionise everything from production efficiency to supply chain management, paving the way for a smarter, more connected manufacturing ecosystem.
However, the report states that despite an awareness of the transformative impact of digital technology, only 12.5% are making digital tech central to their growth strategies in 2024. This shows that manufacturers may be hesitant to invest in these technologies due to lack of understanding of their ROI, or they may just not have the resources available.
"Manufacturers need to understand the strategic implications of digital tech to identify routes to value and prioritise opportunities. A good place to start would be to migrate/replatform operations to the cloud, or check the efficiencies of existing platforms". Carra Haffey, Leader of Manufacturing and Automotive, PwC.
If you'd like to find out more about the transformative impacts of digital technology, contact us and we will show you how Busroot, our manufacturing performance tool, can pave the way to growth.
Navigating Narrow Margins
Despite the optimism, profit margins are recovering at a cautious pace. Even though inflation rates are decreasing, manufacturers are still facing increasing material costs and stiff global competition. 47% of manufacturers believe that input costs will be a major risk factor in the next 12 months. To counter these, many are streamlining operations, embracing lean manufacturing principles, and exploring new markets to enhance profitability.
Labour and Skills Challenges
A significant hurdle facing the sector is the scarcity of skilled domestic labour. Brexit has caused a big issue in accessing skilled labour from overseas, and in 2023 there were 69,000 job vacancies across UK manufacturers. Despite this being down from it's peak at 99,000 in May 2023, it doesn't look like this number is set to significantly reduce any time soon.
Factors like an ageing workforce and a mismatch in skills have also exacerbated this issue. Manufacturers are countering this through innovative training programs, collaborations with educational institutions, and exploring international talent pools.
Increase in Sustainability Efforts
The report has highlighted a rapidly increasing move towards sustainable manufacturing. Compared to 2021, the proportion of companies that have Environmental, Social and Governance (ESG) has increased by 48%.
With society becoming increasingly more aware of their impact on the environment, consumers are actively seeking out organisations that are dedicated to sustainability. This means focusing on ESG targets is a significant area for growth for manufacturers, and we will see increasing investments into net zero initiatives, such as green energy and waste reduction.
Flexible and Innovative Growth Strategies
2024 will see UK manufacturers adopting more flexible and innovative strategies to secure growth. This includes diversification of product lines, tapping into new domestic and international markets, and implementing more efficient manufacturing processes. These strategies are not just about survival; they're about thriving in a rapidly evolving global landscape.
The UK's Competitive Edge in Manufacturing
The UK is increasingly being seen as a competitive hub for manufacturing. Thanks to supportive government policies, robust infrastructure, and a strong domestic market, over half of the manufacturers consider the UK an advantageous location for their operations. This perception is a testament to the country's enduring appeal as a global manufacturing powerhouse.
However, manufacturers are worried that the 2024 election, combined with continuing global geopolitical pressure, could bring uncertainty to UK manufacturing.
2024 Manufacturing Trends
Based on feedback from UK manufacturers, it's clear that we will likely see the below manufacturing trends in 2024:
- Increased Adoption of Automation and Robotics: The UK is set to see a significant uptick in the use of automation and robotics across the manufacturing sector. This trend is driven by the need to improve efficiency, reduce costs, and tackle labor shortages. Automation technologies, including robotic process automation (RPA) and industrial robots, will be increasingly used to perform repetitive tasks, leading to higher productivity and precision in manufacturing processes.
- Sustainability and Green Manufacturing: With growing environmental concerns and stringent regulations, there is a strong push towards sustainable manufacturing practices. UK manufacturers are expected to focus more on reducing carbon footprints, waste reduction, and energy efficiency. This includes adopting circular economy principles, where the goal is to design out waste, keep products and materials in use, and regenerate natural systems.
- Digitalisation and Smart Factories: The digital transformation of the manufacturing sector, often referred to as Industry 4.0, will continue to gain momentum. This encompasses the integration of digital technologies like the Internet of Things (IoT), artificial intelligence (AI), machine learning, and big data analytics to create smart factories. These technologies enable manufacturers to improve operational efficiency, product quality, and flexibility by providing real-time monitoring and predictive maintenance.
- Supply Chain Resilience: The COVID-19 pandemic and subsequent disruptions highlighted the vulnerabilities in global supply chains. In response, UK manufacturers are expected to focus on building more resilient supply chains through diversification of supply sources, increased stockpiling, and the adoption of technologies that enhance supply chain visibility and agility.
- Customisation and On-demand Manufacturing: Driven by consumer demand for personalised products, there will be a growing trend towards customisation and on-demand manufacturing. Advances in technologies such as 3D printing and AI will enable manufacturers to offer bespoke products without significant increases in cost or production time. This trend also aligns with the move towards more flexible and responsive manufacturing systems.
How data analytics tools can overcome manufacturing challenges
As mentioned, digital technology is a core component of business transformation and growth, and companies need to invest in these technologies to improve output in 2024. Busroot by Output Industries will be at the forefront of this growth, as one of the UK's top manufacturing analytics tools.
Busroot utilises Internet of Things technology to connect factory assets to the cloud, and provide essential data. Busroot can monitor cycle times, OEE, production efficiency, asset utilisation and more. At any given time, Busroot will be able to tell you whether a machine is working, and if not, why not.
This information is notoriously hard to access by employees, as there are so many factors that could cause a machine to not function properly. Quickly identifying and fixing the root cause of a problem is essential for improving production efficiency, increasing output and maximising profits.
Want to see Busroot in action? Schedule a demo with us to see how our analytics platform can transform your business!