To paraphrase author Mark Twain, the death of the manufacturing sector in recent years has been grossly exaggerated. The UK is the 11th largest global manufacturer and, whilst there has been a fundamental shift away from traditional heavy manufacturing like steel, we still build cars and there is vibrant growth in aerospace, oil and gas, chemicals, clean technologies, composite materials and robotics/drones.
Manufacturing Case Studies
Growing a business through work/life balance
Read how Menzies applied #BrighterThinking to FTI supporting a Manufacturing owner/manager not only restore a work/life balance but grow his business.
Read how Menzies applied #BrighterThinking to a specialist manufacturing business by advising on Group Reconstruction. The result: this new structure allowed the business to ring fence valuable assets without incurring onerous tax charges.
Key challenges for the manufacturing industry
Much has been made of the UK’s productivity per head compared with our international competitors. The Office for National Statistics estimates that UK hourly output is around 27% below both France and Germany, and 31% below the US.
Knowledge and innovation is essential for creating sustainable advantage. Whilst 94% of UK manufacturers state they are engaged in innovation, most are concerned that they are not doing enough to stay competitive. Lower levels of investment may hold the key. The UK only spends 1% of its GPD on R&D, compared with Germany’s 2%. Similarly, the UK does not rank highly in terms of Patent Applications. Whilst 69% of business R&D emanates from this sector, only 37% of R&D Tax Credit awards are to manufacturing companies.
The UK is simply not creating enough engineers or talented leaders for tomorrow’s business. OECD results show that the UK performs poorly on intermediate professional and technical skills, and is forecast to fall to 28th out of 33 OECD countries for intermediate skills by 2020.
Technological advances will further reduce energy usage and wastage, for example, 3D printing has had a huge impact on efficiency and cost savings. Control of energy usage and supply chain costs combined with management of the impact of commodity prices are key to ensuring competitiveness.
Overseas manufacturing competition
Asia is continuing to increase its influence on global manufacturing and the continued perception is that the Asian markets build everything faster and cheaper.
It has never been easy to fund the long delay from innovation through prototyping to commercial production, and a funding gap still exists. Investment is essential to raising productivity. In today’s economy that is not simply a matter of increasing the physical infrastructure but also, crucially, developing human and intellectual capital.
Manufacturing sector advice services
We advise a diverse range of manufacturers, as well as a number of sector-dependent clients. We work closely to find solutions to industry issues, utilising our expertise in everything from business strategy and corporate finance, to audit and tax advice.