The New Year is a time for optimism, a time when hope runs freely and the potential of the next 365 days feels almost tangible. Whilst most of us are busy looking at our prospects in our love and business, the UK’s manufacturing organisation (the EEF) have been looking towards the future of manufacturing.
Now, in a survey of executives across the manufacturing sector, the EEF have found that UK manufacturers are positive and ambitious about their personal business plans for 2017, despite the expectation that the many economic risks of 2016 will be carried forwards into this year.
The EEF found that half of the manufacturers found that just over half of manufacturers saw more opportunities than risks in 2017, but a great many were still worried about what the year might bring.
In particular, manufacturers remain unsure about the Brexit vote, and among the risks most concerning from 2016 executives picked significant movements in exchange rates, economic volatility in major markets (like China) and uncertainty around the UK’s place in the EU going forward.
In regards to exchange rates, the report found what many of us had expected, that the post-referendum weakness of the pound had increased import costs. In turn, this has led to higher construction costs. Executives said that this continues to be a concern into 2017, and will reduce profit margins during the year. They also couldn’t rule out this resulting in price rises for consumers.
It’s also impossible to rule out the role that political uncertainty could have on the economic stability of major nations. Elections in France and Germany in 2017 will test the viability of the UK’s biggest trading partner and Donald Trump’s isolationist trade policy could have disastrous implications for the US, as well as the rest of the world. Specifically, manufacturers said that Trump’s policies could threaten growth in emerging markets, which in turn could weigh heavily on global trade.
Though this wouldn’t have a dramatic direct effect on manufactures like us, who produce JIC fittings and hose fittings UK, the knock on effect of a depressed global trade would cause damage to manufacturers in ever sector.
Despite these myriad concerns, more than half of the survey’s respondents said that their company would increase investment in technology and innovation. Meanwhile, 44% said that they would increase their marketing efforts and brand promotions in 2017.
Another 44% said that they would look into moving into the export market in an effort to deliver their strategic business plan, whilst other actions identified by bosses was included vertical integration, increasing services revenue and diversifying into new supply chains.
Commenting on the survey findings, Terry Scuoler, CEO at EEF said in a statement, "Global political upheaval means that 2017 looks set to be another bumpy ride, with manufacturers forced to navigate uncertainty, unpredictable economic conditions and a number of risks that have been amplified by Brexit.
"Against this backdrop, a smooth journey is far from guaranteed, but firms are strongly attuned to the challenges and remain fully focused and determined to deliver their long-term plans for growth."