- Exports to non-Eurozone countries cited as reason for some optimism
- Engineering positions left unfilled due to skills shortage
- Greater clarity from government would benefit business
- Future affordability of energy a key concern for high tech sector
LONDON, 7th January, 2013 -- The UK high tech manufacturing sector is cautiously upbeat about its prospects for growth in 2013, despite an overall fall in its positivity about the country's economy in the last six months.
Less than one in five (17%) of the 405 high tech manufacturers questioned for the fifth wave of the GE High Tech Index in November / December 2012 said that they felt positive about the current economic situation in the UK. However, this figure increases to 44% when the interviewees consider the conditions for UK high-tech manufacturing businesses. Even more encouragingly, over seven in ten (72%) still feel positive about their own businesses' performance, demonstrating that the majority feel that their company is in a good and stable position, despite the picture in the country as a whole.
The high tech businesses surveyed were also slightly more positive about the UK economy going forward into 2013. Over a third (35%) felt the overall economic outlook would get better in 2013, although only 2% felt it would get 'a lot better' and 33%, 'a little better'. The most common reasons provided for this cautious optimism were exports to non-Eurozone countries, cited by almost three in five (58%), followed by the weak pound (46%) and falling inflation (32%).
Those questioned were also relatively upbeat about the UK high tech manufacturing sector in 2013. 69% of manufacturers said they felt the outlook for their own business performance in 2013 would be either a little better (54% of those questioned) or a lot better (15%) with 40% of respondents feeling the overall outlook for the sector would be either a lot better (4%) or a little better (36%). 44% felt there would be no change in current conditions.
It is clear though that concerns still persist about the current skills gap in the high tech manufacturing sector. Around a quarter (23%) of those interviewed for the survey reported having to leave positions unfilled in their workforce due to skills shortage. For two thirds (66%) of these companies this has been for more than one position. Almost all businesses surveyed (97%) have taken steps to overcome the skills shortage. The most popular measures taken include retraining existing employees (79%), investing in new machinery (77%), improving the work environment (67%) and sharing responsibilities (63%). More than half (54%) would also favour the introduction of a Chief Engineering Officer in the UK.
GE UK CEO Mark Elborne commented: "The GE UK High Tech Index was launched two years ago and the six monthly surveys have shown the sector has weathered the economic storms relatively well. Despite concerns one in five of these businesses in our survey expects to grow by 10% in 2012. Sentiment in the sector has fluctuated during the two years. However there are still some strong, positive business stories out there. The UK has a strong manufacturing heritage and there is good potential to build on this."
Future prospects and UK economy
According to the respondents of the survey those who believe the performance of their business will get better, attribute this hope towards more customer enquiries/ orders/ new business (20%), an increase in exports (17%) and new products or research and development (17%), suggesting that they have concrete reasons to expect that their business performance will improve. Amongst those who expect their business performance to stay the same (24%) or worsen (7%) over the next 12 months, the main reason is lack of demand, cited by a quarter (26%), followed by the state of the economy / consumer confidence (23%).
Just under six in ten (57%) of those questioned expect their business to have grown in 2012. This suggests 2012 has not been quite as successful for some as they hoped it would be, since this figure has fallen from 69% in June 2012. Just over one in ten (12%) expect to see their business decline in 2012 (and for 3% of the sample, this decline will have been by more than 10%). However, the high tech manufacturing sector is showing resilience in difficult economic circumstances. One in five of those we surveyed (19%), expect their business to have grown by over 10% in 2012.
Access to funding
When it comes to the availability of bank funding for businesses, just 16% believe it to be plentiful / readily available. Three in ten (27%) believe it to be available but on fairly onerous terms, while 23% think it to be either available but on unacceptably onerous terms or impossible to obtain. These figures show almost no change from those collected in June 2012 (16% plentiful / readily available; 28% available but on fairly onerous terms; 25% available on unacceptable terms / impossible to obtain).
After two and a half years in power for the coalition government, businesses were also asked about the impact of policies in areas such as regulation, tax, energy, education and training. Respondents felt that taxation, regulation and energy policies had the most impact on their businesses with 35% saying they had felt the impact of tax policies (with 50% of those reporting an impact saying the changes were negative.) 31% of those questioned had noticed the impact of changes in regulation policies with 49% of those reporting this situation saying these changes had been negative and just 14% reporting a positive impact. Respondees were more positive about policy impact in the areas of international trade and education and training. 63% of those who had felt that policy on international trade had impacted on their business felt it had a positive impact. 51% who had seen an impact on business of education and training policies felt the developments were positive. Approximately two thirds felt greater clarity from government in policy areas including energy, education, taxation, regulation, overseas trade would be an advantage to them.
There are also high levels of concern about the UK's future energy policy. There is consensus that lack of clarity on this policy area is most likely to have had a negative impact, with two thirds (66%) of those who have noticed an impact reporting that it has been one that has been detrimental to their business. The vast majority (84%) are concerned about the affordability of energy, while three in five (61%) expressed concern about security of supply. Opinion is split on concern about carbon emissions: 46% are concerned, while 53% are not.
Around half of the businesses included in our survey (49%) have considered generating their own power on site or investing in energy efficient technologies. More energy efficient lighting is most likely to have been considered (by 81% of those who are considering generating their own power or investing in energy efficiency). This is followed by insulation (62%) and solar power (61%).
Mark Elborne added: "It is good to see the UK high tech manufacturing sector saying it is positive about 2013. There are some sectors which have particularly good growth potential for the UK such as oil & gas, where we at GE have recently announced job additions."
Every six months, GE undertakes a survey of senior executives working in the UK High Tech manufacturing sector. The first survey took place in Winter 2010, and was repeated in Summer 2011, Winter 2011, and Summer 2012. This report provides an update into the state of the sector six months later.
ORB International conducted a survey of 405 senior decision makers in UK High Tech businesses between 19th November and 3rd December 2012. All businesses had at least 10 employees, and they were defined as High Tech on the basis that they...
- To at least some degree "use a high level of design or scientific skills to produce technologically complex products and processes - usually of a high value"
- Are a primary manufacturer of components, equipment or products rather than an assembler of components that are sourced entirely from external suppliers
- Are characterised by at least three of the following attributes:
- Has a highly skilled workforce
- Produces technically complex (Hi-Tech) products
- Uses advanced, innovative or cutting--edge technology to produce its products
- Produces products with a high added-value
- Utilises a high level of design, innovation or creativity
- Makes extensive use of computer, high-precision and information technologies
- Engages in a large amount of Research & Development (R&D)
- Has high levels of productivity i.e. not necessarily high volume but efficient production processes / high value of output per employee etc
- Provides consultancy and/ or advisory services in relation to its products
The research was conducted over the telephone, using computer-aided telephone interviewing (CATI) methodology. We spoke to 176 respondents who had participated in previous waves of this survey in addition to 229 newly recruited respondents.
Of those we spoke to, 78% expect the turnover of their UK operations to be between £0 and £16 million in 2012, 19% expect it to be between £16 million and £800 million, and the remaining few respondents expect it to be over £800 million.
About GE in the UK
GE has been operating in the UK since the 1930s. Today our 18,000 employees serve the energy, oil & gas, healthcare, aerospace and financial industries. We have a strong and continuing commitment to the UK economy, having invested £13bn in our British businesses since 2001. From our 60 major locations, including 25 world-class manufacturing and R&D facilities, we deliver high-tech innovative solutions to the global marketplace. Our locations include London, Aberdeen, Amersham, Cardiff, Cheltenham, Leicester, Nailsea and Southampton.
GE (NYSE: GE) works on things that matter. The best people and the best technologies taking on the toughest challenges. Finding solutions in energy, health and home, transportation and finance. Building, powering, moving and curing the world. Not just imagining. Doing. GE works. For more information, visit the company's website at www.ge.com.
For further press information contact APCO Worldwide:
Mark Maguire, Corporate Communications Director, GE UK
Tel: 020 7302 6068 (office)
Tel: 07717 517071 (mobile)
+44 20 7302 6068
+44 7717 517071