There’s no escaping the fact that manufacturing is entering a period of evolution and change. But for companies willing to embrace that change, the opportunities are vast, as the latest EEF Manufacturing Fact Card, published in September 2017, highlights.
And despite the ongoing ‘challenges’ within manufacturing that are often reported in the media (Brexit uncertainty, the skills gap, a lack of women in engineering etc,) the latest findings in the EEF fact card paint a positive picture.
In this blog post we explore 8 key takeaways that provide insight both into the current state of UK manufacturing and what we can expect for the future:
1) Export of manufactured goods is on the up
As the fact card illustrates, there’s been a massive upswing across the world in terms of export demand which is helping to push the UK manufacturing sector up. Exports of manufactured goods are on the increase (accounting for 10% of the UK’s total output and 44% of its total annual exports.) The UK’s single largest market remains the US, accounting for £40.8 billion of annual exports. Our second biggest market is Germany with exports valued at £28.7 billion per year, followed by France at £16.1 billion annually.
2) Manufacturing jobs pay well
Despite the historic perception that manufacturing is low-paid, it actually continues to be one of the most well-paid sectors in the UK, with the mean annual gross pay for jobs within manufacturing currently averaging £32,000 per annum - well above the average annual earnings of £28,299 across the rest of the UK economy. Demand for specialist skills is increasing and it is hoped that changes to the apprenticeship scheme will attract more young people into manufacturing.
3) UK manufacturing ranks in the top 10 in the world by output
UK manufacturing is continuing to move up the rankings for output, elevating itself from 9th position in 2016 to 8th in the world in 2017. China occupies the top position, followed by the United States and Japan. Significantly too, public expectation of the manufacturing sector is positive, with an EEF street poll finding that 70% of UK adults surveyed agreed that the UK had the potential to be in the top five manufacturing nations.
4) Gross Value Added (GVA) by sector
Manufacturing of food and drink continues to top the list in 2017, accounting for 16% of GVA; followed by 14% for Chemicals/Pharmaceuticals and 14% for Transport. Other Manufacturing accounts for 21%; Manufacture of Metals is 12%; Machinery 8%; Rubber/Plastics and Non-Metallic Minerals 8% and Electronics manufacturing 5%.
5) Employment figures across the manufacturing sectors
Of the total 2.6 million people employed within the UK manufacturing industry, 16.7% (418,000) are employed within the Food and Drink Sector; 13.3% (334,000) within Metals Manufacture; 11.7% (293,000) within the Transport Sector and 10% within Rubber, Plastics and Non-Metallic Minerals.
6) The sectors that are driving manufacturing innovation
A stand-out finding is that manufacturing accounts for 70% of total UK business Research and Development (R&D) and 13% of total business investment annually. The production of Chemicals and Pharmaceuticals is leading the way in terms of manufacturing innovation, accounting for 34.4% of total R&D expenditure; followed by 33% within the Transport industry; 13.4% within Electronics manufacture and 7.1% within Machinery manufacture.
7) How is manufacturing spread around the UK?
The fact card also sheds light on output within the different regions of the UK. The North West is by far the biggest producer in terms of both the value of its annual output (£24.2 billion) and in the number of people it employs (318,000.) In the South East, manufacturing output accounts for £19 billion per annum and employs 279,000.
8) How important is the EU for exports and imports?
The percentage of manufacturing exports destined for the EU is high across every region - accounting for an average of 51% of each region’s annual exports. Looking at the export market going forward, the high proportion of exports destined for EU is a sizeable dependence across all the regions in the UK. Equally too, where the UK imports from is significant, with a large reliance on European supply chains which will require new sourcing strategies post-Brexit. The US however remains a significant market across the UK, topping the board as our single biggest market both for exports (£40.8 billion per annum) and imports (£58.6 billion per annum.)
With the increased focus on technology and automation, the manufacturing landscape is shaping up to be more complex to navigate than perhaps ever before in industrial history, bringing with it an increased need for higher skills and a reliance on more specialist knowledge.
But as the 2017 EEF Manufacturing Fact Card highlights, the manufacturing sector continues to export, to thrive, to innovate and to remain an integral part of the UK economy.