Britain’s manufacturers continue to grow at a stable rate in the second quarter of the year, easing fears of a significant recession for the sector.
According to the latest Make UK/BDO Q2 Manufacturing Outlook survey, the overall outlook remains positive, primarily driven by robust demand in the 'Other Transport' subsector, encompassing aerospace, shipping, and rail manufacturers. Similarly, the 'Electronics' subsectors also demonstrate strong performance, attributed to high demand from Europe. These industries report a significant balance of output, indicating their robustness.
Despite the favourable conditions, Make UK predicts a slight contraction in manufacturing for 2023. However, this outlook is significantly better than the substantial contraction initially anticipated by Make UK towards the end of last year and in the first quarter.
Additionally, the current edition of Manufacturing Outlook reveals a noteworthy trend. For the tenth consecutive quarter, manufacturers have consistently raised both their UK and export prices at a higher rate compared to previous quarters, starting from the first quarter of 2021. However, the latest data suggests a slowdown in the rate of price increases, hinting at a potential easing of inflation at the production level.
Here are some key takeaways from the report:
- Make UK's Q2 2023 Manufacturing Outlook report, in collaboration with BDO, reveals that manufacturers are experiencing their calmest operating conditions since the start of the pandemic in 2020.
- Following a rebound in activity in the previous quarter, manufacturers had raised their expectations for further growth in the current quarter.
- Supply-chain disruption is easing, positively impacting businesses' ability to fulfil orders.
- Output volumes have increased to a balance of +24%, while total orders have fallen to a balance of +21%. Although this represents a slowdown, it remains strong for the second consecutive quarter.
- The balance between output and total orders indicates a greater share of manufacturers producing more than those placing orders, suggesting a potential easing of supply-chain disruption.
- Whilst the domestic market continues to perform well, it has shown a slight slowdown on balance, falling from +20% to +15%. However, export orders on balance have improved from +12% to +15% which is the first time exports have come to meet or exceed UK orders since Q4 2020.
- Investment intentions have slowed with a balance of +10%, indicating a healthy number of firms planning to invest but at a slower rate.
- The rate of price increases has slowed, suggesting a potential easing of inflation at the production level. However, price balances remain high.
- Margins are improving, indicating businesses are recovering losses from the previous year.
- Business confidence has marginally improved, while economic confidence has increased, influenced by media reports forecasting GDP growth for the UK.
- Manufacturers remain committed to increasing hires as the economy shows faster-than-expected growth.
To read the full report visit the MakeUK website.
The report also offers a viewpoint from BDO that considers the role digital transformation can play in delivering efficiencies for manufacturers.
It recognises that digital transformation needs time and investment set aside with an aligned set of objectives about what the technology is going to enable. Ultimately, digital transformation is the process of embracing technology across a business to drive change, optimising what is currently a fragmented process by reducing manual activity to connect key information, in the case of FourJaw's machine monitoring platform, the data is all about productivity improvement and energy usage reduction.
So what does this look like in practice?
Using technology to capture machine productivity data, provides manufacturers with the insight to inform process improvements. For example:
- Identification of consistent machine stoppages that were occurring across the factory and having a negative impact on the throughput for the day.
- Changes to work loading to reduce setup times or split the setup across multiple batches.
- Using the data to justify CAPEX expenditure on robot loading to utilise lights out manufacturing.
- Analysing the downtime data to drive continuous improvement projects and support operators in keeping machines operational.
As an example, if we take the productivity data of five manufacturers, across different subsectors and look at the data from the first four weeks of having FourJaw installed and compare this to the last four weeks of data, there is a productivity increase on average of 17% which results in an output capacity increase of 60% (on average).
It's data like this that demonstrate the true impact digital technologies can have on a manufacturer's efficiency and ability to compete (profitably) domestically and overseas. Find out more about our machine monitoring software and how manufacturers benefit from it by clicking here.
