Manufacturing sector’s untapped potential can lift us out of recession

John Allan
THE government claimed a “march of the makers” would drive Britain out of recession. Fast-forward a few years, and it might just be becoming a reality.

Figures last week showed UK manufacturing is on the up – rising at its highest pace since the end of 2010. Overall output rose by 1.9 per cent in June, following declines in both May and April, while industrial production jumped 1.1 per cent. This increase, and a rise in export orders, have pushed the Markit/CIPS manufacturing purchasing managers index (PMI) up to 60.2 in July from 56.9 in June.

The latest statistics suggest that Britain is on the mend. It gives international investors reason to be optimistic about our economic future. Britain exported a record £78.4bn of goods between April and June, thanks to surging demand from countries outside Europe – which has grown by 49 per cent since 2009.

Demand for UK manufactured goods remains strong, but if the government is to meet its exporting targets, it must reach out to international partners. By demonstrating the affordability and quality of British industries to emerging economies, the UK could capitalise on its growth and become a global manufacturing leader.

Events like next year’s International Festival for Business – for which I am an ambassador – can give Britain’s small businesses the encouragement they need to start operating internationally. Our research shows that 6 per cent of our members who don’t currently export would like to in the future. By doing so, they could add £792m to the economy.

To support businesses, we need to showcase the best that Britain has to offer. On a macro level, this means connecting our firms with new markets that have the potential to boom, demonstrating that UK manufacturing extends to a wide range of sectors – including food and drink production, digital technologies and craft work.

Converting raw materials into a product that meets customers’ expectations and specifications requires creativity, adaptability and ingenuity. A report by McKinsey estimates that Britain’s manufacturing future lies in providing a range of innovations in materials and processes — from nanomaterials, to 3D printing, to advanced robotics.

But in the this year, the UK will have a deficit of more than 60,000 engineering graduates. To ensure that Britain has the skills it needs to develop these new techniques and technologies, the right initiatives – like the government’s research and development tax credits – must be put into place to secure a new generation of designers and engineers.

This means encouraging wider participation in programmes that will up-skill the sector. Engineering apprenticeships are gaining traction in the UK, rocketing by 86.8 per cent in less than 10 years, but Britain remains some way off its competitors. Germany’s manufacturing sector employs 28 per cent of the population, compared to just 14 per cent in the UK.

John Allan is the national chairman for the Federation of Small Businesses.