London -- Sunday, January 23rd 2011; As the coalition government prepares to discuss the future of UK manufacturing at the forthcoming advanced manufacturing summit, a major study by GE sheds new light on what senior executives in the important high tech manufacturing sector believe the government should be doing to improve the sector's business prospects.
While the findings of the GE High Tech Manufacturing Index show the sector is confident about prospects in 2011, the 400 high tech manufacturing businesses that took part felt the UK government could play a significant role in helping their businesses to perform. In addition they were less optimistic about the UK's likely place in the global manufacturing league tables in five to ten years, unless the barriers to UK competitiveness are addressed.
High tech manufacturing companies span a range of sectors including car parts, electronics, machinery and general engineering but are united in having technically advanced products or undertaking substantial research and development.
When asked what specific actions government should take, top of the list was increasing vocational training and apprenticeships as an alternative to university and a review of taxation and export duties (both 16%). Reduced red tape (14%) and access to capital (11%) were also key, as was more support and promotion of manufacturing industries (10%).
Thinking about the UK's position in the global rankings in five years time, participants predicted the UK will drop at least two and a half places from its current 6th position to at least 8th. Looking to the ten year mark they were gloomier, predicting a likely mean position of 9.3 in the league table. Just 54% believed the UK would still be in the Top 10 by 2021. 16% were rather more pessimistic saying they felt the UK would be ranked between 10th and 15th.
Mark Elborne, President & CEO of GE in the UK commented:
"The government's advanced manufacturing summit is very well timed. Our research shows that the UK's advanced manufacturing sector is growing strongly and at a faster rate than the rest of the UK economy. However the research does also show there are areas of concern - such as skills, red tape and access to capital -- which need to be overcome in order for the UK to remain truly competitive. This is a very good point to have this debate and ensure the long term prosperity of this sector."
Other topics covered by the GE High Tech Manufacturing Index include high tech manufacturers' prospects for future growth, their customer base, export prospects, as well as their views on skills and barriers to success.
Highlights of the findings include:
Export prospects and global trade
- UK high tech manufacturing businesses are extraordinarily international in outlook. The vast majority of businesses (82%) exported products in some way to markets outside the UK.
- Looking to the future, businesses expect to expand their export sales over the next 5 to 10 years by an average of 49% within five years and an average of 54% by 2021.
International competition
- When asked which emerging markets would eclipse the UK over the next five years, the most popular candidate was India (identified by over half 58%), - with Brazil (26%), South Korea (14%), Russia (14%) and China (12%) also featuring strongly
- Twenty five different markets were identified as having the potential to overtake the UK in the rankings indicating that UK businesses perceive competition from a number of different markets globally
- When it comes to competition, 59% of respondents identified international markets as the biggest competitors, specifically USA (21%), China (19%) and Germany (17%). 30% feltthat the stiffest competition comes from businesses UK wide
- In ten years time, 70% predict the fiercest competition will come from abroad -- China leading the way with 36% (a rise of 17 percentage points on current indicators), India 18% (up from 5% on how currently competitive they are viewed as) Germany (down 13%) and USA (down 12%). The number of businesses which thought that competition from within the UK would be toughest declined (18%)
Skills
- While respondents were positive about recruitment levels of the next year, they were concerned about skills shortages. 20% of respondents cited engineering skills as being in short supply and a further 11% said mechanical or manufacturing skills and qualifications were also in short supply. Another 10% felt it was difficult to find applicants with the right positive 'can do' attitude
- Only 19% said they were able to find all the skills in new recruits that they required and 31% said they had recruited people from outside the UK owing to the lack of suitable qualified people from Britain itself
Access to capital
- Access to capital was regarded by most as essential for growth (74%), but many were finding difficulty in sourcing finance -- three in ten of those in the market for capital said they regarded the terms as unacceptably strict or capital was ' impossible to obtain'
Another key finding from the survey was the tremendous diversity of the sector which embraces a wide variety of businesses, large and small and a myriad of different industries and sectors. In particular there seem to be five categories of organisation:
- The transformers -- companies with a long history that have evolved and responded to changing demand -- 44% said they had developed over time from being a traditional to an advance high tech manufacturer
- The 'lab coat' entrepreneurs -- younger businesses often establishes by entrepreneurs with an original idea or directors who had previously worked in another high tech business
- The meteors -- fast growing businesses. 12% of those questioned said they expected total business turnover in 2010 to show growth levels of over 20%, 4% said they had achieved growth of over 50%. By 2011, 11% of businesses expect to achieve 20% plus growth with 4% expecting to achieve 50% growth
- The globetrotters -- businesses with a highly international customer base. When asked to name their five top international markets 35% of respondents answered they sold 'worldwide'. Others named a wide range of markets with key countries mentioned including Germany (17%), USA (18%), France (16%) and China (9%). In all respondents named 62 countries where they were selling products. Of those that did sell overseas 46% said that the proportion of their turnover accounted for by exports had increased over the past 12 months. And many (23%) saw global markets as their biggest opportunity in the future
- The niche players - businesses operating in very specialist and sometimes esoteric business areas often with a high tech twist. Examples include sail making, fishing boat builders and producers of high tech and specialised milking machinery. Other diverse areas include aircraft interiors, specialised optical and dental equipment for dentists and opticians, products to service laboratory 'clean rooms', high tech crash barriers and traffic light systems, advanced artificial knee joints and hip joints, high specification marine navigational equipment, motorcycle chassis and suspension systems and many others.
Concluded Mark Elborne:
"It is fascinating to see the rich diversity of the UK's high tech manufacturing base -- so it is little wonder that this part of the manufacturing sector is bucking the trend with a more promising outlook. We look forward to tracking the progress of the sector in future editions of our High Tech Manufacturing Index."
Mark Maguire
GE
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+44 20 7302 6068
+44 7717 517071
Sara Cruz
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0207-534-0623