Despite responding better than in previous recessions, UK manufacturing is set to shrink further and struggle to replace lost jobs says new report
Over three quarters of Britain’s consultants believe that further contraction of the manufacturing sector is likely despite manufacturers having responded better to this downturn than in previous recessions.
The new report, published by the Management Consultancies Association (MCA) also warns that the sector is unlikely to generate sufficient jobs to compensate for the 188,000 that are expected to be lost from the sector this year.
The MCA report also found that the sector will face substantial challenges in adapting to the post-recession world as the former business landscape is replaced by a “new norm”.
Two thirds of those surveyed by the MCA expect demand to be much harder to forecast in the future, and the majority view a far greater collaboration between manufacturers and retailers as crucial. The report also says that consumer expenditure is likely to remain low for the foreseeable future which could delay the recovery.
Alan Leaman, Chief Executive of the Management Consultancies Association said:
“While the worst of the recession may be over for the manufacturing sector, it is important that manufacturers do not take their eye off the ball. There is still much to do to bring the sector back to health in a ‘new norm’ for business which will be fundamentally different to what has gone before.”
Tim Lawrence, PA Consulting Group said:
“Most manufacturing in UK is relatively lean, and the weak pound is helping exports. The real challenge is to ensure that the supply chain does not limit the UK’s competitiveness.”
The MCA report also identifies the following inter-related factors, which are hindering manufacturers in positioning themselves for the recovery:
An inability or unwillingness to invest
A lack of funding and /or cash-flow problems
An inability or unwillingness to innovate
A lack of effective leadership at the top of their organisation.