The introduction of a long-term Industrial Strategy is set to bring a surge of offshore manufacturing production back to the UK, according to a major annual survey on the investment landscape for UK industry.
The report, published by Make UK and RSM UK, says that almost three quarters of companies (70%) believe that the re-shoring of production back to the UK will accelerate in response to an Industrial Strategy, with just 3% saying it would make no difference to prospects for re-shoring.
The findings are among a range of forecast benefits from such a strategy, including greater investment in UK facilities, increased investment in automation and R&D, as well as a renewed push to increase exports to the EU.
Make UK has released the findings of its survey ahead of the Autumn Statement and in response to the green paper on an Industrial Strategy announced by the UK Government last week.
The UK Government said it would focus its Industrial Strategy on:
- Advanced manufacturing,
- Clean energy industries,
- Creative industries,
- Defence,
- Digital and technologies,
- Financial services,
- Life sciences,
- Professional and business services.
Make UK backed its survey results with a call for the Chair of the Industry Strategy Council to announce the composition of the sector sub-groups as soon as possible. According to Make UK, these sub-sector groups should be given the remit to focus on the future technologies in which the UK can become self-sufficient and resilient in the future, with a focus on national security. As such, the groups should be given the ability to call on cross Department resources and support where necessary.
Fhaheen Khan, Senior Economist at Make UK, said:
“Manufacturers are ready to unleash the benefits to investment from a long-awaited industrial strategy. It’s clear that this will bring a wide range of benefits and aid companies who are accelerating their moves into greater use of automation and digital technologies, with increased recruitment of higher-level skills. Given the US, Europe and China are moving at pace with plans to boost investment in green technologies in particular, the UK needs to match these efforts step for step.”
Mike Thornton, head of manufacturing at RSM UK, added:
“It’s clear the impact a comprehensive, forward-looking strategy will have on manufacturers. Rather than lagging behind the UK’s economic recovery, strategic clarity will unlock growth, innovation and even kickstart a re-shoring bonanza – creating jobs, boosting key business and infrastructure investment and improving productivity.”
According to the survey, as well as increased re-shoring, half of companies would increase investment in existing facilities in the UK, almost a third (30%) would increase automation and increase exports to the EU (29%), while more than a quarter (26%) would increase R&D. Just 1% of companies said the introduction of an industrial strategy would have no impact on their business.
The survey also shows that, compared to perceived beliefs, UK-owned companies have higher levels of investment intensity than foreign-owned companies in both plant and machinery (8.7% compared to 4.7%%) and R&D (5.5% compared to 5%). According to Make UK this shows the potential benefits to investment in the UK from an industrial strategy which creates growth among home grown businesses who then scale up.
Looking ahead to the Autumn Statement, more than half of companies (56%) say reducing Corporation Tax would have the biggest impact on investment, closely followed by the expansion of capital allowances to software (53%) and the extension of full expensing to leased and second-hand machinery (46%). Separately, almost a third of firms (30%) said that high interest rates were the biggest obstacle to raising finance adding to pressure on the Bank of England to cut rates at its meeting next month.
As well as analysing the impact of Government policy, the survey also provides a comprehensive view of investment trends across UK manufacturing. It shows that plant and machinery, along with labour, remains the top priority for companies’ investment in the next twelve months (53% and 52% respectively). Amid the ongoing debate about the investment performance of UK industry compared to peers, almost two thirds of companies (64%) invest up to 10% of their turnover in plant and machinery with a further quarter (26%) investing between 10% and half of turnover.
Almost three quarters of companies (72%) invest up to 10% of turnover in R&D, while almost one in five (18%) invest between 10% and half.
The survey of 209 companies was conducted between 27 July and 21 August.
