Manufacturing Mondays

By Manufacturing Mondays

🌪 A turbulent start to 2022 for manufacturers

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Manufacturing Mondays
Manufacturing Mondays
The impact of those growing price pressures is already being borne out in the results of Make UK and BDO’s latest Manufacturing Outlook survey.
Manufacturers are experiencing the highest cost increases since 1980 when disrupted global supply chains triggered a surge in energy prices.
Profit margins have declined recently suggesting firms are struggling to cut costs at a sufficient rate to compensate for the rising input prices of labour and materials.
The impact is being felt across the board.
Manufacturers are taking the right actions by spending more on recruitment and skills and investing in factories and new machinery. But sometimes the things we cannot account for have the biggest impact. Russia’s unaccountable decision to go to war threatens to turn what was an already uncomfortable inflationary situation into something worse.
Read Q1 Manufacturing Outlook in partnership with BDO here.

Prices are increasing at record rates
Our first comprehensive deep dive into orders, employment, output and investment intentions for 2022 shows that manufacturers are continuing to raise both UK and export prices at record levels in the face of escalating inflationary pressures across the board which show little sign of abating.
Our work in partnership with BDO found UK prices rose from a balance of +52% in Q4 2021 to +58%. These are the highest balances in the survey’s history and the fourth successive quarter where record numbers of companies increasing prices have been reached.
But but but… Given the survey was conducted before the invasion of Ukraine and the substantial increases in the costs of energy and raw materials since this is likely to have pushed price increases even higher!
To give an indication of just how sharply inflation has bitten and, how manufacturers have responded, the equivalent balance on domestic prices in Q4 2019 before the onset of the pandemic and leaving the EU was just +5%, with the equivalent balance in Q1 2020 +16%. A similar picture exists for export prices where the balance is reported at +50%. By contrast, the balance in Q1 2020 was just +13%.
The survey shows a broad impact of escalating costs with over half of companies (54.2%) seeing a major increase in the cost of raw materials and more than a third of companies (37.4%) seeing a major increase in the cost of energy.
⚠ Almost 10% of companies say that increases in both these indicators represent a ‘threatening increase’ to their business. With a quarter of companies (23.7%) saying that it will take more than two years to resolve energy-related costs for their business
Make UK Campaigns
💥NEW💥

Our Q1 2022 Manufacturing Outlook report in partnership with @BDOManufacture shows the latest on #ukmfg employment, orders, output and investment intentions.

What impact has the turbulent start to 2022 had on UK manufacturing? https://t.co/DyKFFv9Kya
All eyes on the Chancellor
There is no denying now that the Spring Statement must be used to ease the cost burden on business or put our recovery at risk.
In response to this cocktail of rising cost burdens for business, we are urging the Chancellor to use his forthcoming Spring Statement to delay the planned increase in National Insurance and examine other ways to ease business costs and boost investment. These include:
  • Reinstate business rates relief for small businesses and bring forward the improvement relief and investment relief exemptions by 12 months
  • Extend the Super Deduction scheme with a view to making it permanent at the Autumn Budget.
Companies are now facing eye-watering increases in costs which are becoming a matter of survival for many.
🌪 While some of the increases are driven globally, the Government cannot use this as a shield from the fact some are self-imposed and, added together, are now forming a perfect storm for companies.
It wasn’t so long ago that the Chancellor said he’d do “whatever it took”. Many businesses are facing a tipping point from which some will simply not recover - the time has come again to do whatever it takes to support companies and their employees through this difficult period.
Businesses in plea for help from soaring inflation | Business | The Times
Small firms plead with Chancellor to spike National Insurance hike | This is Money
March of the Makers
Last week Director of Policy Verity Davidge and Chief Economist Seamus Nevin spoke to Politico about the challenges facing manufacturing, and what we are calling for ahead of the Chancellor’s Spring Fiscal Statement.
Here are a few snippets:
🛢 Oil be damned: Influence sits down with Make UK’s Policy Director Verity Davidge and Chief Economist Seamus Levin just as news breaks that the U.K. is slapping a ban on imports of Russian oil. It’s a big gambit, and one Levin says could add to the indirect costs of the Ukraine conflict manufacturers are already taking on.
👀 One to watch: Raw metals, particularly of the precious kind, are another casualty of the conflict’s trade disruption. Nickel and platinum “come almost exclusively” from Russia, says Levin, and engine parts used for planes and cars “need to be made to a particular spec,” with highly-specialized components needing exact kinds of metals. If those can’t be sourced, the parts can’t be made — and even a missing nut or bolt has the potential to lead to entire factories having to down tools.
⚖ Pass me the shoehorn: Influence’s time with the pair is almost up, so we do what everyone in Westminster does and try to shoehorn in Leveling Up somehow. Luckily, Davidge is all over it.
She says the government’s big domestic push to boost neglected regions is backed in principle by manufacturers but warns Leveling Up risks becoming “a buzzword that they can’t quantify.” Her members are already ticking a lot of the government’s boxes, creating “highly-skilled and highly paid jobs,” investing in research and development and exporting — all while being based in the very regions ministers say they want to boost.
Talk of big “shovel-ready” projects is all well and good — but manufacturers’ needs are often much more prosaic and Whitehall has to keep an ear to the ground.
Read more 👇
London Influence: March of the makers – POLITICO
Talking all things accelerating the adoption of 5G
ICYMI Senior Policy Manager Nina Gryf shared Make UK’s latest work on how we can accelerate the adoption digital technologies and 5G across the UK.
Speaking at the Digital Catapult webinar, we stressed that digital technologies are only as good as the technology that connects them.
In addition, cash and collaboration are key. We need acceleration of public and private funding and collaboration with catapults, universities, manufacturers, innovation hubs to give better access to the cutting edge tech for all of the innovative businesses to de-risk their ideas.  
When we meet again in five years, we sure still be talking about the skills shortages and finance but I hope we won’t have to discuss the benefits that digital adoption brings to the business - Nina Gryf.
Let’s keep our fingers crossed!
We ❤️ policy and manufacturing, so let’s talk:
📱 Twitter
📧 Email
💬 LinkedIn
Copy editor: Bhavina Bharkhada, Make UK Head of Policy & Campaigns
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