The UK industrial sector is a vibrant sector in the UK. The importance to the economy and lives of people cannot be overstated. However, there are problems, new and recurring, that besets the sector. Below is a review of these problems and solutions to them.
Brexit and Exchange rates
It is difficult to predict what may happen over the coming months and years following the UK’s vote to leave the European Union – a lot remains to be seen. Many business are be rightly worried about any negative impacts to the UK economy that Brexit will bring and how that will affect them.
The post-referendum exchange rate volatility experienced has had a varied impact across the UK industrial sector; the top line is that imported raw materials and components have largely become more expensive, whereas exports have become cheaper and more attractive to potential buyers.
Solution – There is actually not much that can be done than to make the best use of the situation. On the pro side, the weaker pound has provided exporters will some much-needed relief, so industries can work at increasing their export.
If the situation will remain the same or not depends on the terms that the government is able to negotiate post-exit, in the meantime industries can work at maximising the benefits that comes from the competitiveness of their products because of the weakened currency.
The skills gap
This is at least one of, if not the biggest, threat in the industrial sector in UK. With the already thin supply of skilled workers further reduced with the exodus of EU citizens, the threat just keeps getting bigger. The impacts could be great – and not in a good way. Many companies will have to invest more in running their businesses having to bring in oversees expatriates and those unable to meet the cost will be forced to move their business oversees altogether or just fold up.
Solution – The solution is simple and the message is clear, the future of British industries lies firmly in the ability to attract, create and retain skilled workers and grassroots talent. Over the coming months and years, it will be even more important for businesses in the industrial sector to form relationships and work closely with local schools and universities, as well as the government. This is of course already happening.
The introduction of the apprenticeship levy (from April 2017), whilst bringing an additional payroll costs for large employers, is also a positive development in this area. Apprenticeships are very important and, with an ageing workforce, industries must look to the next generation to recruit people for the future – for tomorrow’s business.
Cyber security and data protection
A recent report from the manufacturers’ association, EEF, found that UK manufacturers for instance, need to step-up their planning for cyber security. The headline finding from the report was that almost half of manufacturers have failed to increase their investment in cyber security in the past 2 years.
With businesses increasingly adopting technology and with data continuing to play a progressively critical role in the industrial sector, the risks that businesses in this sector face are changing at a rapid pace.
Solution- With the EU General Data Protection Regulation (GDPR), businesses will need to start planning ahead and preparing for the changes. Businesses must be dynamic and flexible, always ready to adopt new security measures. In the short term, UK businesses will be required to adhere to the new rules, which apply from May 2018. In the longer term, it is likely that any new UK data protection standards would have to be equivalent to the EU’s GDPR framework.
Product development and innovation
Many of the UK’s medium-sized businesses are slow to take up new technology, and they can be wedded to old business models that no longer suit new ways of streamlined production. Too often, the attitudes of manufacturers are shaped by a lack of awareness of the international competition.
Solution- Today’s manufacturing sector is a fast paced and consumer driven market, which is why product development, research and innovation and becoming increasingly important. Britain historic strengths in innovation and design, particularly in the manufacturing sector, will therefore continue to be very important in terms of driving future growth and maximising profitability, and the industrial sector must leverage on that. It is interesting to see that companies such as Hopkinsons already adopting, and even setting the pace, in adoption of new technology.