South: Manufacturing outperforms rest of economy

Large parts of UK manufacturing are outperforming the rest of the economy and are well prepared to weather the current economic situation according to a report published by EEF, the manufacturers’ organisation and business advisers BDO Stoy Hayward.

The report, Modern Manufacturing – The High Performers, contains newly published analysis revealing the top twenty high performing sectors within UK manufacturing. It highlights the strengths of manufacturing in the UK and paints a picture of diversity and vibrancy, from aerospace to pharmaceuticals, within an industry integral to the UK economy.

The research shows that not only are many parts of manufacturing high-performing in the UK, but some of the sectors are reporting stronger growth rates than their equivalents in France and Germany.

The analysis also adds weight to evidence that manufacturers are reaping the benefits of growing world trade by adopting a range of strategies for success. These include technology-driven responses to globalisation, in addition to innovations in process, design and services.

David Seall, EEF South East Region Director commented: “Manufacturing is providing a beacon of light amidst the current economic gloom. In the South East in particular, manufacturers are succeeding on the global stage as a result of their long-term commitment to innovation, quality and continuous improvement. They are making a significant contribution to the national economy and to wealth generation in the region, notably through their ability to compete effectively in overseas markets.”

Robin Lloyd, Audit Director and Head of Manufacturing at BDO Stoy Hayward’s Southampton office commented: “The analysis shows that there is no one winning formula for high performance in a relatively high cost location like the UK. The sectors that have succeeded in recent years have adopted a range of strategies that make them stand out internationally, including: scientific innovation and knowledge, a focus on customer value and the development of customer facing service offerings.”

“What the majority of these thriving sectors do share however, is a focus on exports, which shows how manufacturers have turned globalisation to their advantage. For two-fifths of them, exports now account for more than half of their turnover. Trade is hugely significant to high growth manufacturing, particularly in the emerging ‘BRIC’ economies which have seen strong growth in recent years. This demonstrates the responsiveness of UK manufacturing to a range of markets – new and old. Agility is key to success in the current market place.”

A recipe for success

Nine sectors have outperformed the manufacturing average over the last five years, together accounting for almost 60% of UK manufacturing output. Especially strong growth can be seen in other transport equipment, mechanical equipment, medical and precision instruments, other non metallic equipment and recycling, which have expanded between four and ten times the average.

Room for growth

As well as highlighting the pace of growth, the report shows the diversity and size of the high performing sectors. There are a small number of large sectors in the top 20 with aerospace and pharmaceuticals alone accounting for a tenth of output. But other sectors in the list are much smaller but growing very quickly, highlighting the evidence that companies operating in niche sectors can be highly successful. In the fast changing global world of today this also highlights that adaptability and speed of response may be more important than scale.