As 2014 gets into full swing from a business perspective, manufacturing is one sector of the UK economy that should be looking forward to the New Year with some degree of optimism.
The last half of 2013 was particularly strong and by December growth levels were at their highest for 20 years and 5000 new jobs were being created a month, all great signs for a sector which for many years had been labelled as if not dead, at least dying.
Politically too, these results play into George Osborne’s hands, suggesting that perhaps an evolving ‘balanced recovery’ is underway. The Government’s address on manufacturing has been somewhat inconsistent, ranging from Mr Osborne’s proclamation of ‘a Britain carried aloft by the march of the makers’ in his 2011 budget, to a zero mention for manufacturing or industry in December’s Autumn Statement.
Given this inconsistency, I would argue that the majority of successful manufacturers are successful despite the Government’s actions rather than because of them. That isn’t to say Government support wouldn’t be welcomed, it’s just that it shouldn’t be solely depended upon.
Any moves to create a playing field that is competitive on an international basis would be welcomed not just by manufacturing – cuts in corporation tax and a freeze in business rates would go a long way to creating a growth-friendly, job-creating environment.
In the interim though, there is much British businesses can do to help themselves. ‘Buy British’ is a message most commonly associated with changing consumer behaviour but we believe this should be a major consideration in B2B purchasing decisions.
To test the water, we’ve investigated the appetite to buy British among UK procurement professionals and the results are encouraging. Over 70% of those questioned looked favourably on UK-based companies when buying goods, while three quarters (75%) agreed that UK businesses should support themselves by buying from each other. A third went further claiming there was even ‘moral case’ for UK companies to do this.
Interestingly, larger businesses were even more supportive with 71% arguing there was a ‘particular duty’ on big business and government to exercise their purchasing power within the UK. What’s more, 52% of corporates are doing more than just talking and are actively looking to increase their UK supplier base.
Key motivators for this action are revealing – 78% identified shortening supply chains or ethical concerns with some overseas suppliers, while almost 50% cited increased transport cost as a driving factor. Around a third said they struggled with longer lead times and reducing competiveness of overseas goods.
Although there will inevitably be hurdles to overcome –a third of buyers thought British companies were uncompetitive, for example – there is real cause for optimism here, and not just for manufacturers. Service industries are another example of a sector which has lost out to overseas competition in recent years and would benefit from big buyers looking closer to home.
If as an SME business community we can highlight both the strength and diversity of our offering and its relative competiveness, we are pushing at an open door – British businesses are keen to buy closer to home, now our task is to make it easy for them.
David Brimelow is the MD of Duo Uk
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