Covid-19 to stunt manufacturing until 2022 warns Make UK

Forecasts reveal it will take until 2022 for manufacturing to recover to its pre-Covid-19 growth track, while it could cost a potential £35.7 billion in Gross Added Value this year alone, according to a major report published today by Make UK and Santander UK.

In the first detailed analysis of the Covid-19 impact on UK manufacturers, the report - ‘Responding, Re-setting and Re-inventing UK Manufacturing Post Covid’ - sets out the scale of the challenges ahead for the sector. It also highlights how quickly manufacturers responded at a time of national crisis – from filtration specialists who’ve turned their hand to creating personal protection equipment (PPE) face masks, to signage firms diversifying their products to create social distancing signage for customers across Europe.

The report predicts that the sector will be at the forefront of helping the UK meet its net zero carbon target through a mix of investing in green, sustainable processes and maximising the use of digital technologies. But it warns this will only happen through a re-purposed industrial strategy involving a partnership with government and other stakeholders recognising the key value of the sector to the future of the economy and all regions of the UK.

The report makes clear the impact of Covid-19 on some of the world’s most established manufacturing nations, including the US and Germany. It reiterates the importance of manufacturers diversifying their customer base to help achieve growth, maintain demand and avoid over reliance any one specific market or customer.

Stephen Phipson CBE, Chief Executive at the manufacturer's organisation, Make UK, said: "History has shown us that a strong industrial base provides the foundations needed to create a prosperous society. However, the UK has unfortunately become culturally tone deaf to the idea that manufacturing matters and can provide solutions to the challenges that we face, something the sector has aptly shown during this crisis.

"A new digital, greener and more sustainable economy will emerge from this with an opportunity to catapult manufacturing, science and engineering once again to centre stage in the UK."

The report also looks at the impact of the disruption to supply chains and logistics management. It reveals the extent of dependence on China with 31% of small companies and almost two thirds of large companies (65%) sourcing components there or other affected countries.

However, the report reveals a striking desire to mitigate risk and build resilience in the future by reviewing supply chains with more than half of companies (53%) already reviewing them and a further third committed to doing so in the next year.

This shift will be vital in helping Government with its exercise to map out supply chains and understand critical sectors and components which will be needed to build greater resilience into the economy overall.

A renewed manufacturing will need industry to support wider adoption of technology. According to Make UK this will require the skills to support a digital transformation which must now be a national strategic priority with the creation of a National Skills Task Force.

The report also stressed that by embracing technological change this will help manufacturers get ready for the new international trading environment they will face both post Covid-19 but also outside the EU. This will help them take advantage of new markets and trading opportunities, possibly without having any physical presence on the ground.