Manufacturing minister needed as firms decry lack of government support

Nine in ten manufacturers are unhappy with the current level of government support for the sector, the latest Manufacturing Outlook Report from Crowe has revealed.

Almost half saw ongoing global turbulence and economic conditions as barriers to growth – though nearly 70 per cent are nonetheless expecting a growth in sales this year.

During a period of high inflation, political changes, and continued strained supply chains, the report – conducted in partnership with the Confederation of British Metalforming (CBM) – looks at the key issues impacting manufacturers.

Johnathan Dudley, partner and national head of manufacturing at Crowe, said: “With more than half the world’s population voting for future governments this year, the manufacturing sector’s attention has been focused on areas that can be directly influenced and transformed with the right policy support and intervention.”

This has included 70 per cent of manufacturers investing in carbon neutral initiatives – up a third on the previous year – with only one in 20 respondents now citing energy as a barrier to growth.

Crowe says its analysis shows that the effect of global conditions, including geopolitical tension and conflict, global and national inflationary pressures, and political turbulence, are having an increasing impact on the sector.

These concerns can be aggregated with Brexit and trading tariff results, with more than half of respondents stating they have a significant concern around supply chain uncertainty.

Meanwhile, demand for investment and willingness to invest in manufacturing were significant considerations for respondents.

The report shows that businesses have predominantly funded themselves from their own cash resources this year, as demand for capital investment finance remains relatively low.

“There’s a clear reluctance to invest and borrow”, said Johnathan.

“And with funding from the government reducing as Covid loans start to pay down, there’s a real need for government intervention.

“Reshoring and near shoring should be back on the agenda, as access to raw materials, expertise and the necessary funding to capitalise on the opportunities at hand are essential.

“For example, at present, the UK is incredibly efficient at recycling steel scrap, but only 25 per cent of it is processed and retained in the UK for supply, while the rest is exported.

“Local sourcing and greater control of supply chains is clearly necessary.”

As for energy, the UK is quickly becoming a world leader in renewables amid growing investment in decarbonisation – but this is only made possible through government funding.

Strategic allocation of this investment into UK manufacturing, says Crowe, will be crucial moving forward.

Johnathan continued: “Large numbers have been thrown around by politicians in terms of support for manufacturers, but the proof will be whether this is actually spent on what the sector needs, as evidenced in this report.

“Businesses in this sector face many challenges, from financing to recruitment, but a looming election offers some hope.

“I’d like to see greater support for UK businesses, and a reduction of regulatory barriers for manufacturers in recognition of the vital role they play in the UK economy.

“The UK has a rich history in manufacturing. For this to continue, it’s high time that a dedicated minister for manufacturing was established to unlock the sector’s potential and allow the UK to revive its position as a global manufacturing hub.

“Determining a long-term strategy, a minister for manufacturing can light the fuse of a new industrial revolution in the UK by aligning innovation, economic development, education and support nearly a million green jobs to help get this country making, building and adding value again.”

Stephen Morley, president of CBM, added: “Manufacturing should be a priority for this UK government and the next.

“The challenges of 2024 present a great opportunity for the sector, with the UK government prioritising economic growth to pay the bills.

“The scene is set for manufacturing to drive UK growth and play a larger part in the UK economy’s GDP.

“We need significant investment and government support focusing on an industrial strategy.”