Government must speed up plans for a new industrial strategy

Government must speed up plans for a new industrial strategy

A new report out today by EEF, the manufacturers’ organisation, and NatWest, calls on the Government to speed up plans to introduce a consistent and coherent long-term industrial strategy to ensure that manufacturers’ growth ambitions are fully supported across the pre- and post-Brexit divide. It says that swift implementation is vital if growth ambitions are not to be allowed to fall by the wayside, particularly while the UK steers its tricky way towards Brexit.

Industry’s call is backed up by a new poll showing nine in ten UK adults (90%) agree that the UK needs a comprehensive, long-term industrial strategy[1] and 86% want the Government to promote a stronger manufacturing base in Britain[2]. The report welcomes the fact that a UK-wide industrial strategy is back on the Government’s table and says that it must clearly set out the Government’s goals for growth, backed by policies which deliver a more skilled workforce; more resilient infrastructure; a lower cost of doing business and better support for growing businesses.

The study – Manufacturing Ambitions: an industrial strategy for a stronger economy - shows that three quarters of manufacturers (76%) are going for growth, while seven in ten (71%) have a three to five year business plan in place to back up their ambitions. The sector already has a strong track record on productivity and, promisingly, there is every indication that this is set to continue. Almost two thirds of firms (63%) are focussed on driving up productivity, while margins (71%) and sales (64%) are also key targets in manufacturers’ growth plans.

Innovation and the introduction of new business models are coming to the fore as companies pursue growth. Over nine in ten are either already increasing innovation efforts (63%) or plan to do so within the timeframe of their current business plan (29%). Manufacturers have also been quick off the mark in spotting the growth opportunities from servitisation (providing services to complement product sales). Over four in ten (41%) are already actively providing services, while a further 27% have it targeted within their business plans.

Supply chain collaboration is, however, seen as even more critical to growth, with over half of manufacturers (52%) already enhancing cooperation in areas such as production, design and development and a further quarter (26%) planning to do so. The depth of collaboration may be a surprise to those outside of industry, with 67% of manufacturers already working with their supply chain on product design and development.

Other key areas for supply chain co-operation are in customising offers to customers (67%) and forecasting demand (60%). And while manufacturers see a range of activities as having a positive impact on productivity, one in ten (10%) say that greater supply chain collaboration would provide the biggest boost.

While identifying some strong positives, the report also points out that the current trajectory of manufacturers’ business plans still falls short of where the sector needs to be by 2026. And, while companies can innovate and work hard to tackle many of the internal and supply chain challenges they face, creating the right business environment through an ambitious, comprehensive and long-term industrial strategy spanning all Government departments will be critical to support growth.

Terry Scuoler, CEO of EEF, the manufacturers’ organisation, says: “We need to get this right and we need to get this in place now so that manufacturers’ growth ambitions are supported across the pre- and post-Brexit divide. It is not enough to talk about an industrial strategy – it is time for the Government to draw a line under the stop-go efforts of the past and to demonstrate its commitment to industry by putting some much-needed flesh on the bones.

“Manufacturers are not just talking about future growth – they have firm plans in place to make it happen. Their ambition and drive will help get the sector and our economy on the road to stronger, better-balanced growth, but this must be matched by Government. If we are to stay the distance and realise the full benefits for the UK then complacency is not an option.

“A consistent long-term industrial strategy can help us make more of what we have and develop the growth drivers of the future. We must strive for better productivity, increased trade and more ambitious investment in new technologies. Government can underpin this by supporting higher skills, investing in infrastructure, lowering the cost of doing business and providing world class support for growing businesses.

Richard Hill, NatWest Head of Automotive and Manufacturing, says: “We have some amazing manufacturing businesses in this country. The industry is a significant part of the UK economy and it is vital that businesses are given the right support in order to compete globally and succeed. As this report clearly indicates, a long term industrial strategy will help UK manufacturers to compete and succeed in the future.

“At NatWest we are already well down the line with building a series of solutions and support systems to aid the potential and aspirations of the sector. With continuous engagement at its core, we hope to provide progressive mentorship that can plug manufacturers into the advanced technologies, the most up-to-date thinking and R&D, and the best new business models and practices.”

The full report - Manufacturing Ambitions: an industrial strategy for a stronger economy – can be downloaded here.