Just over 8 in 10 manufacturers in London and the South East are planning to maintain or increase investment over the next 12 months – more than in any other region in the UK – according to new research from specialist business advisory firm FRP.
Expanding delivery and logistics capabilities (25%), upskilling and training existing team members (25%) and driving productivity through hiring (25%) were listed as top investment priorities by contributors to the new research, which features in a new national FRP report, Against the odds: The future of UK manufacturing. The report points to a resilient sector that is looking to invest in advanced technologies to help stimulate new growth.
Despite a challenging year, with industry output on the decline, nine in 10 (90%) of those surveyed are confident in their ability to trade through the next 12 months, while most remain convinced of the robustness of their supply chains, with the vast majority (83%) expecting suppliers to continue trading successfully through the year ahead.
FRP conducted a similar study at the end of 2022, which found that manufacturers were far less optimistic about their prospects.
Firms call for greater support with energy prices ahead of winter
With inflation beginning to ease, the majority (86%) of respondents in London and the South East say they are confident that demand for their products will increase in the year ahead. However, challenges remain – chiefly increasing energy costs (27%), the cost of materials (27%) and increased property costs (27%).
As a result, a quarter of businesses surveyed stated they would like to see further energy support measures implemented by the Government over the winter.
Manufacturers are also planning a range of measures including increasing prices for customers and distributors (42%), extending terms with suppliers (31%) and – more positively – introducing or expanding the use of automation or AI in their back office operations (35%). While 15% say they are already using AI, machine learning or automation to its full potential, almost twice as many (44%) believe there is the potential to apply it more widely in their organisation.
Luke Wilson, based in FRP’s London office, said: “Experience shows that businesses which continue to invest in bolstering their operations through economic uncertainty usually emerge best positioned to benefit from more stable conditions, so it’s encouraging to see such a strong appetite to do so amongst the region’s manufacturers.
“The priority for business leaders should now be to identify the areas in which funding can most effectively be channelled to drive growth.
David Hudson, Restructuring Advisory Partner at FRP, said: “Looking at the results of this report, I’m confident that manufacturers have the plans in place to succeed, with a singular focus on their long-term growth and prosperity.
“The results reflect what we are hearing anecdotally across FRP, as many of the supply issues firms reported last year have now been resolved to a large extent, with the most pressing concerns now on the demand side of the scale. We would hope to see at least a small recovery in demand as inflation eases and consumer confidence stabilises.
“While we await those changes to take effect, it’s heartening to see manufacturers exploring the potential of new technologies, including Artificial Intelligence. The cost of adopting AI can be high and include a lengthy payback period. But, for those that have access to funding, it is something they should be looking at to drive efficiencies and free up human resource.”