The global recession has taken its toll on an already fragile UK manufacturing sector. Nearly Chemical reactor manufacturer in Mumbai all areas of UK manufacturing, from Aerospace to Automotive, have been affected by the recession. The following article discusses whether the UK manufacturing will be able to capitalise on the green shoots of recovery.
The UK was once a powerhouse in the manufacturing sector and led the world in many industrial sectors. However, the manufacturing sector has been on a downward spiral as companies moved production to countries which could produce manufactured goods at a fraction of the cost of the UK. Furthermore, the appetite for government investment in manufacturing decreased as the UK moved to a service led economy.
Because the UK manufacturing sector was already in decline the recession could have been the final nail in the coffin for the sector.
The three main reasons that commentators and business people think that UK manufacturing will not be able to take advantage of the recovery:
1. Traditionally manufacturing skills are passed down from generation to generation to ensure that as staff retire, younger people can take their place to ensure continuity. However, as the older members of staff are made redundant they are unable to pass down their skills and quite often moved into service sectors. Therefore, even in a recovery it can be argued that UK manufacturing will not have the skill base to capitalise on increased manufacturing deman
2. The UK services sector is very strong and the UK has led the way in the provision of financial services to the rest of the world. The government has been very keen to encourage and invest in the financial sector and has provided them with bail outs even when they have made mistakes. However, the government has been prepared to let manufacturing companies such as Rover and LDV fail demonstrating that they feel the future of the UK economy is still in services rather than manufacturing. It will be very difficult for UK manufacturing to recover from the recession without some kind of government financial assistance.
3. UK manufacturing has struggled to compete with overseas competition for its products. Emerging economies have been able to produce identical goods far cheaper than UK companies. Recent economic data has shown that the UK economy will recover far slower than emerging economies, this may have the effect of these economies being able to invest in lean manufacturing techniques and attract further investment so that they can still produce their goods cheaper than the UK. If the UK is still unable to compete with overseas economies then again recovery from any kind will be very difficult.
So, it can be shown that there are many valid reasons why the UK economy will not recover from the so called credit crunch recession. However, there are also arguments why the UK will recover including:
The UK government has invested heavily in its Apprentice scheme with many thousands of young people striving to learn skills in the more traditional method of learning with practical experience on the job. This scheme has been quite successful in the manufacturing sector and is helping reverse the trend of skills being lost forever. As these apprentices increase their skill set and are ready to work autonomously they will provide a vital cog in helping the UK recover from a recession. Even in the event of redundancies these apprentices will have gained the knowledge to put in place to help lead the UK into recovery.
There are a number of companies in the UK manufacturing sector that have managed to cut costs during the recession and continued to invest in new technologies in order to capitalise on a recovery. Companies such as Land Rover have been given government grants of around 1 million pounds to develop environmentally friendly vehicles. This continued investment is key to companies wishing to capitalise on any recovery as they will be able to introduce new goods at a time when consumers are looking to spend money.
There is some evidence that companies are buying from the UK again for a number of reasons. Firstly, many companies have had concerns about the quality of goods manufactured in emerging economies and are returning to the UK even though the initial price may be higher. Secondly, the weak pound has made UK goods more competitive in the global marketplace leading to increased overseas demand.
So, as you can see there are arguments for and against the issue of whether UK manufacturing will be able to recover from the recession and take advantage of the recovery. Both arguments are compelling and have valid points and much will depend on how the government and UK business in general views manufacturing.
The authors own view is that history has shown us that business moves in cycles, the UK has recently come through a business cycle led by services not manufacturing. Although this has been successful it has eventually run out of steam and therefore investors are going to be less likely to support new service companies where the offerings are intangible. However, as organisations look to invest in other sectors manufacturing may become more attractive as it offers steady, tangible returns. This investment will play a key part in whether UK manufacturing can recover from the recession. The investment in new machinery and processes will help the manufacturing base recover as it becomes more competitive nationally and internationally as well as being able to design and manufacture new inventions.