Manufacturing can rebuild the economy – but needs help

RESURGENT manufacturing industries can fill the growth gap left by the diminishing public sector, says the EEF, but there needs to be a new government strategy to develop larger UK companies.

The results of a survey of 300 companies is published in ‘The Shape of British Industry’ published by the manufacturers’ organisation in partnership with RBS, and comes ahead of the government’s Growth White Paper and its Manufacturing Framework.

EEF said British manufacturing is poised to fill the growth gap as the public sector plays a smaller role in the economy, but the sector would benefit from a government strategy which helps to overcome the growth barriers that companies face and to grow the next generation of large global players. The report contains new analysis by EEF of the disparity in numbers of larger UK companies compared to those in Germany and the US.

The report paints a picture of a sophisticated, successful sector which is currently growing at the fastest rate since 1994 and whose growth strategies are centred on innovation and investment. Some 76% of companies state that their growth strategies will be achieved by increasing innovation in the UK and 69% by increasing capital investment. It is also highly export driven, with exports accounting for more than half of turnover in 40% of companies and one third having production facilities outside the UK.

EEF said figures demonstrate the potential of manufacturing to lead private sector growth and rebalance the UK economy. While the government’s recent focus on measures to open up opportunities for smaller firms and reduce the regulatory burden they face is welcome, it is vital that its growth strategy seek to break down the barriers to growth for all sizes of companies at and at all stages of their growth.

Commenting, EEF Chief Executive, Terry Scuoler, said: “Manufacturing is well placed to fill the growth gap. But this will only happen if there is a genuine partnership with government that helps companies of all sizes and growth stages to overcome the barriers that they currently face to growth.

“Whilst the current attention on young businesses and start ups is helpful we must not ignore the wider benefits to the economy that larger companies bring. The UK doesn’t just need a handful of larger companies over the next decade; we need hundreds of them with the scale and muscle to tackle our economic challenges. Otherwise we risk placing a speed limit on our growth potential.”

Peter Russell, Head of Manufacturing Sector, RBS Corporate, said: “What is clear is that manufacturing continues to make a significant contribution to the UK economy and is well placed to play an even greater role in a sustained economic recovery.”