Dave Atkinson, UK Head of Manufacturing at Bank of Scotland Commercial Banking, looks at the significance of the manufacturing sector for the UK’s economy and what the future holds.
The UK’s manufacturing sector is a crucial part of Britain’s economy. It directly supports more than 2.6 million jobs, and accounts for 10% of the UK’s GDP. Across the nation, the sector’s productivity is consistently above the UK national average, while in Scotland the manufacturing sector expanded by 2.9% in 2017, according to data from Fraser Institute.
Encouragingly, this success isn’t restricted to just a handful of industries under the manufacturing umbrella. Last year, Britain’s food and drink manufacturers contributed £28.8bn to the national economy of which £3.8bn was from Scotland and accounted for 19% of total manufacturing output, while the UK’s aerospace industry took flight with growth of 9.8%.
Exporting: opportunities and challenges
But manufacturers don’t operate in isolation and the sector isn’t immune to the headwinds created by the current economic and political uncertainty. The UK’s decision to leave the EU and renegotiate its trade agreements has meant that many firms are now facing tough questions about when and how to invest in their businesses. Many have taken steps to address these challenges, while others are looking to seize the opportunities that Brexit will create.
A key opportunity lies in international trade. With Scotland exporting £6bn in food and drink alone last year, it’s clear that many Scottish firms are already taking advantage of a healthy appetite for our goods abroad. But for those who are new to international trade, the process can seem daunting.
To help companies navigate the exporting journey, there are number of tools and services available. One example is the Bank of Scotland’s International Trade Portal, which helps firms to identify buyers in international markets and assess the costs of doing business overseas. The strength of ‘Brand Britain’ has fostered great demand for our manufactured products worldwide, and we anticipate seeing more and more British businesses make the most on the profitability and resilience that exporting can offer.
Building the future
As we look to the year ahead, it’s clear that firms of all sizes are set to capitalise on the possibilities of Industry 4.0. Research that we conducted in association with MHA and Henderson Loggie found that 88% of Scottish SMEs viewed technologies such as robotics, automation, and the ‘Internet of Things’ as an opportunity to be embraced.
These advancements, coupled with widespread investment in R&D by manufacturers, are set to transform processes, driving efficiencies and opening up new possibilities in production and design.
But the era of Industry 4.0 isn’t ‘one-size-fits-all’. Different firms will need different degrees of support to implement the technologies best suited to their business, and so it’s important that any financing available is tailored, too. Solutions such as asset-finance can help businesses fund their growth ambitions by spreading the cost of acquiring important machinery, or by assisting them in making strategic investments in advanced technologies.
The manufacturing sector has a brilliant history and a bright future ahead. In the coming months, we expect to see the sector continue to thrive, making the most of new markets, and meeting the challenges of the future head-on. In our role in helping Scotland prosper, we’ll be with them every step of the way.