The UK manufacturing industry has managed to survive a collection of unforeseeable challenges but not without a lasting impact on the sector. Disrupted operations and increased costs have made the start of 2023 a difficult time for manufacturing managers, but a challenge that will be overcome thanks to the popularity of high-quality British production. Read on to see the state of UK manufacturing and the predictions for later in the year.
Rise and Fall of the UK NI
In 2022, all UK businesses struggled with increased running costs due to increased national insurance contributions. This and many other decisions made business difficult for struggling manufacturers nationwide as they attempted to balance an unsteady international supply chain with the further constraints of increased costs. These issues impacted the growth of every sector as profits were significantly reduced, but fortunately, not for long. In November of the same year, the increases were reversed, giving spring makers room to grow again.
Changes in the Economy
Despite reaching a level of output that was 0.9% higher than before the pandemic, the UK economy contracted by 0.6% as of June 2022. In addition, not all regions reached the 0.9% mark in February, resulting in a more pronounced regional and polarised growth disparity. London is recovering the fastest, as expected, while Wales, the Northwest, and the Midlands are struggling, with recovery rates about 3.3% lower than pre-pandemic levels.
The sad truth is that GDP (gross domestic product) growth in the UK is likely to be negative for the next few years, with -1.3% growth in 2023 and -0.3% growth in 2024. Sadly, manufacturing in the UK is also struggling during these times.
UK Manufacturing PMI Levels
The purchasing managers index (PMI) is the leading indicator used to summarise the economic health of the manufacturing industry. The data for this summary is collected from a survey sent to purchasing managers working within the industry. The supplied answers provide a clear image of many different aspects of the industry, such as:
- Real-life purchasing actions
- Production levels
- Order frequency
- Company inventories
- Employment levels
- Supply chain reviews
Once all these factors are collated, a figure summarising the industry’s economic status is applied. The desired figure is above 50. This result means there is growing expansion within the sector. Unfortunately, the industry is struggling below that number, showing that the sector is retracting.
The UK manufacturing PMI at the start of the year was assigned 46.50 but had been slowly growing, with a rise to 47.0 in January and 49.3 in February. This is the highest the PMI has achieved since July 2022, with increased production levels and reduced supply chain disruptions making a significant difference. Although this is still below the desired line of 50, it is a positive sign for the industry’s immediate future.
Future Predictions for Manufacturing
Managing rising costs is a continuing concern predicted to dominate the coming year for the industry. Previously established supply chains were heavily disrupted during the pandemic, and their recovery is significantly complicated by Russia’s war in Ukraine and the finalisation of Brexit. For example, sourcing electrical components have been made more complex as the logistics of acquiring the required raw materials are increasingly difficult and costly. These challenges force manufacturers to explore new supply chains and invest in better delivery methods.
Near-shoring suppliers and manufacturers are an increasingly popular choice to mitigate the complications of international supply chains. Choosing closer sources of raw materials allows manufacturers to increase their supply chain security and prevent unpredictable delays affecting their projects.
Domestic manufacturing growth is predicted to be apparent before the end of the year due to a similar trend of choosing companies based on proximity. In addition, many suppliers realise the benefits of selecting domestic companies as it avoids the logistical complications and expense increases related to current international supply chains. As a result, there is increasing initiative from the UK government to support the growth of domestic businesses and help the industry rise above the previously mentioned 50 PMI rating.
What UK Manufacturing Means for the UK
Manufacturing plays a pivotal role in the nation’s economy, rated as the highest contributor across the UK and the 9th largest industry worldwide. 51% of all goods exported from our shores comes from various manufacturing companies, and 7.3% of all UK jobs are located within manufacturing.
The last Make UK survey stated that the 9.7% output from the North West UK region actually translates into £183 billion generated for the economy and maintaining 2.5 million jobs, even during this cost-of-living crisis. Additionally, these employers were also free to provide 12% increased wages to their staff compared to other areas of the UK economy. As a result, over 10% of all UK business investments are directed toward manufacturing, including wire form manufacturers like ourselves.
Despite the setbacks each manufacturer has had to overcome in recent years, the previous data clearly shows that UK-manufactured components are still a highly desired choice internationally and domestically. Furthermore, the reliable quality of our small springs for electronics conveys increased confidence for product designers as they know with certainty that our contribution to their application will not fail them.
2022 brought with it many challenges that may have become problematic if it wasn’t for the dedication and innovation of everyone here at Airedale Springs. Everything accomplished last year, and our company’s rising success, is connected to our staff going above and beyond daily.
The potential for this coming year has thrilling possibilities for us as the UK’s leading manufacturer of small springs. Supporting our goals to grow Airedale Springs further, we are exploring new areas of investment and expansion as well as welcoming new talent through our successful apprenticeship schemes. If you’d like to know more about the services we provide, contact us today.