With just over 5 months to go until we leave the EU, just how ready is UK manufacturing for Brexit?
As far as divorces go, our break-up with the EU has been messy, to say the least. Following two years of back and forth negotiations on the terms of our exit, uncertainty still plagues businesses throughout our core industries and the vision of our future beyond March 2019 remains unknown.
Of course, it’s not hard to see why: 40 years of tangled relationships and long-held agreements are hard to unpick on command. Supply chains, logistics and legislation have all been cemented in a certain way for so long, it’s difficult to imagine how we will operate beyond our exit. Now, as the clock ticks violently down to our departure from the Union, it’s looking increasingly like a hard Brexit could be on the table.
No matter your stance on the EU referendum or whether you think Brexit will bring prosperity or poverty, our decision to leave is undeniably the biggest disruption to operations that UK manufacturing has faced since the industrial revolution. Couple this with the rapid evolution of advanced technologies such as automation, robotics and 3D printing and it’s clear to see the industry is on the precipice of vast transformation.
But just how ready are UK manufacturers for all this change?
According to a new intensive report from SSG Insight and Sheffield Hallam University, 83% of British manufacturers are preparing for a hard Brexit by actively forging relationships with new potential international markets. The findings further revealed nearly half of UK manufacturing companies have already identified Asia (44%), North and South America (12%), Africa and the Middle East as focus areas for post-Brexit Britain trade.
Planning ahead is all well and good: however, UK manufacturers will face a number of challenges in forging trade relationships with Asia – from barriers both in language and culture as well as a potential lack of standards and specifications in the absence of robust frameworks for trade agreements. In order to assist manufacturers to ready themselves for such a disruptive change to operations, the UK government must provide clarity on these issues as soon as possible.
Tackling the talent shortage
Since the outcome of the EU referendum was announced, a widespread fear gripped business leaders in this fast-moving sector: the lack of access to labour skills triggered by Brexit. Yet, despite drops in applications from EU nationals, research shows that two-thirds of British manufacturers still expect to hire more staff in the event of a no-deal Brexit.
While small firms are unlikely to expand their workforce following our exit from the EU, 80% of manufacturers with 250-500 employees have made clear their intention to grow their staff-base, as have 70% of firms with up to 1,000 employees. The immediate future of the UK economy may be uncertain, but research reveals a certain bullishness amongst British manufacturers with 23% making clear their plans to prioritise investment in people post-Brexit.
Harnessing new technology
Against a backdrop of political and economic uncertainty, technology has evolved beyond recognition. Today, artificial intelligence and automation technologies are creeping their way into the industry as a means of cutting costs and boosting productivity. According to the research from SSG Insight and Sheffield Hallam University, the majority of manufacturers expect Brexit to accelerate the use of these technologies as a means of “scaling up volume easily to meet demand from the Rest of the World territories.”
The extensive report further indicates the adoption of automation technologies in UK manufacturing firms will eventually drive down the cost of production and allow us to compete on price as well as develop new products for new markets. In order to support their expansion plans in the event of a hard Brexit, 59% of manufacturers in the UK intend to invest in new technologies – from robots within production lines to software designed to harness big data.With only a matter of months to go until the divorce is made final, all manufacturers can do is hope for the best but plan for the worst.