A recent industry survey has shown that many UK manufacturers are optimistic that productivity and business conditions will improve in 2022. Despite the fact that many UK manufacturers will be facing many challenges such as:

• Retaining staff
• Inflation
• Rising input costs
• New importing and exporting rules regarding Brexit

The industry survey conducted by trade body Make UK and PwC found that 73% of UK manufacturers believe that conditions for the manufacturing sector would improve in 2022. Furthermore, 78% foresaw at least a moderate increase in productivity. It is important to note that the survey was carried out in November 2021. So ahead of the latest Omicron variant.

Despite UK manufacturers having a positive outlook for 2022, there are still many challenges the sector will face over the coming year.

 

Challenges for UK manufacturers in 2022

Recruitment

One of the main challenges, UK manufacturers will face in 2022 is retaining and recruiting staff with key skills and talent. In the current climate, this seems to be a challenge for most industries. A recent survey of HR leaders across a variety of business sectors has found that 77% of employers are struggling with recruiting and retaining employees. The most common reasons for employees leaving their roles were because they found better pay at another firm (76%) and a perceived lack of career opportunities at their current organisation (64%). With unemployment rates currently low, the power has swayed towards employees as companies now look to make improvements such as flexible and remote working to make their organisation more appealing to potential employees.

 

Overseas demand affected

Due to the new strict rules that came into force on 1 January 2022, the process of importing and exporting goods is now slower, more expensive, and less flexible. In addition to this, UK manufacturers believe that logistics issues and the uncertain situation regarding pandemic and possible restrictions have damaged export demand. International orders for British-made manufactured goods are down for the fourth month in a row. This decrease in demand overseas will be a concern for manufacturers over the coming year.

 

Supply Chain issues 

Importing goods from other countries will also be a challenge for UK manufacturers as new rules now mean that importers must make a full declaration on goods entering the UK from the EU or other countries. Traders can no longer delay this for 175 days. Furthermore, there will now be additional costs of around £300-£400 for importing each consignment into the UK. Therefore, manufacturers will need to rethink how they import goods cost-efficiently.

 

Despite these challenges, Make UK forecast growth of 3.3% for the manufacturing sector in 2022.

 

How can we help?

At Hawsons we have a dedicated team of manufacturing and engineering accountants at our offices in Sheffield, Doncaster, and Northampton. Our specialist team offers a wide range of services which are tailored to meet your individual needs. Our understanding of the issues faced by the manufacturing and engineering businesses means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.

More from our manufacturing experts

You can find all of our latest manufacturing sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

A new £20M funding programme is set to launch across the UK for manufacturers. The aim of the programme is to help manufacturers overcome supply chain issues caused by the global pandemic. The programme will aim to do this by assisting manufacturers with the integration of advanced digital technologies. The funding has come from UK Research and Innovation and the Made Smarter Innovation programme who will be contributing a combined £10M between them. In addition, £10M has been invested by the private sector.

 

How will manufacturers benefits?

The partners of this programme will work with technology companies, researchers, and academics across the UK to develop an ecosystem for UK manufacturers that is resilient, competitive, and sustainable. This will enable UK manufacturers to solve multiple challenges that they face in today’s supply chain.

 

What projects will the funding be used for?

The Made Smarter Digital Supply Chain Innovation Hub will work together with UK based manufacturers and universities on multiple projects that aim to increase current expertise and increase commercial integration of industrial digital technologies. This includes:

The Last Mile Living Lab: This is used to develop and investigate the challenges and often expensive last mile of delivery and how to improve the efficiency and cost of this.

Digital Enabled Manufacturing Sourcing: The aim of this project is to increase capacity utilisation and production flexibility.

Differentiator: A project that aims to deliver new supply chain models for medicine, on-demand.

The Connect Tempest: This project aims to invent a digital test bed to increase innovation across a number of tiers of supply chain networks that is also collaborative and secure.

The announcement of this new funding is exciting for manufacturers across the UK, especially after such a difficult year due to the pandemic. This new funding will enable manufacturers to implement new technology and innovation to become more efficient and help them recover from the global pandemic.

 

How can we help?

At Hawsons we have a dedicated team of manufacturing and engineering accountants at our offices in Sheffield, Doncaster, and Northampton. Our specialist team offers a wide range of services that are tailored to meet your individual needs. Our understanding of the issues faced by the manufacturing and engineering businesses means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.

In June 2021 the cost of running a factory increased at a record rate. This news caused concerns that prices of British-made goods will rise during the second half of 2021. According to the IHS Markit monthly survey of the manufacturing industry, manufacturers paid higher prices for essential manufacturing components and raw materials in June than in April and May which were record increases in themselves.

MAKE UK (an industry lobby group for businesses in manufacturing and engineering) said its members were holding back from increasing prices earlier this year, as they wanted to see if the cost of materials would start to level off. However, because the prices of materials have continued to increase, manufacturers are now starting to increase prices for consumers. This trend is most likely to continue until the end of the year.

Economist James Brougham, who works for MAKE UK, has said that a number of different factors are causing prices for key components and materials to increase. Firstly, there is an increasing global demand for these components and materials as lockdown measures continue to ease. Secondly, the current supply issues are made worse in the UK because Brexit is still causing delays at UK ports.

The Bank of England governor has recently said that inflationary pressures would continue for several months. He predicts that we are likely to see a recovery to our previous trend of low growth and low inflation laver in 2021.

 

How can we help?

At Hawsons we have a dedicated team of manufacturing and engineering accountants at our offices in Sheffield, Doncaster, and Northampton. Our specialist team offers a wide range of services which are tailored to meet your individual needs. Our understanding of the issues faced by the manufacturing and engineering businesses means that we can proactively seek out ways for you to maximise your profitability and minimise your tax liabilities.

More from our manufacturing experts

You can find all of our latest manufacturing sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.