The Waiting Game
At Cadence we spend much of our time working with people from the UK’s manufacturing sector. Perhaps the single most misunderstood area of British industry, misconceptions around manufacturing include the belief that it’s still predominantly a low-skilled field and that there’s barely any of it actually happening. In reality of course the picture is quite different, and the truth is that UK companies are making some of the best-quality and most sought-after products in the world today. While the UK has always been strong on high technology, our successful exports now range from food to fashion to aerospace and all kinds of points in between.
That is not to say that British manufacturing isn’t facing challenges. As well as facing the disruption that technology is causing all over the world at the moment, there is also the Brexit to contend with. In an era of increasingly interconnected international supply chains, British manufacturers could be forgiven for feeling somewhat anxious in the face of what is shaping up to be a dramatic change of circumstances. Instead of this though, the prevailing sentiment from manufacturers appears to be one of cautious optimism. What are the reasons for this?
The current reasonable health of the sector goes some way to explaining this confidence. While there are one or two countries that are further ahead on embracing things like the Industrial Internet of Things and robotics, there aren’t too many – and most are nowhere close. As well as a generally high standard of manufacturing, there are also several fields in which UK-based firms are world leaders. Advanced manufacturing is particularly strong in the UK and demand for information technology, next-generation engines and industrial machinery is only going to grow.
Another factor is that few people in the sector believe that the government would allow the Brexit to damage our capacity to trade internationally. The avalanche of paperwork that could result from a mishandled Brexit would have a profound effect on the competitiveness of UK manufacturing, which currently accounts for between 10-20% of our GDP (depending on how manufacturing is defined). Any damage to this part of the economy would so clearly be bad news for everybody involved, that firms still seem reluctant to countenance the possibility.
But perhaps the biggest reason that the industrial response to the Brexit has been so calm is that everything still seems to be fine. Since the referendum last June, currency effects have boosted demand for British-made goods, which has helped subdue some of the initial scepticism. With the government holding its cards close to its chest, so little is known about the post-Brexit future that waiting and seeing remains a prudent strategy for most. For now at least, British manufacturers have done exactly what you’d expect them to; they’ve put their heads down and are getting on with the job while they wait to see what happens next.
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