After several years of low confidence, the acceleration of the recovery in 2014 has exceeded expectations. Manufacturing has led the way and many have started to see the importance of the sector again.
But the importance of manufacturing in the UK is still under-estimated.
A survey earlier this month by EEF, the manufacturers’ organisation, revealed that three quarters of the population believe that the UK manufactured more goods 30 years ago than it does today. But as they point out, that is simply not true.
The old talk of a shrinking manufacturing sector, of the UK being unable to compete – these comments have always been misleading, but never more so now. Over the long term the service sectors have grown faster than industry, but, recessions excepted, manufacturing has not declined, it has grown. Whilst employment in manufacturing as a whole has shrunk over time, this is often a consequence of productivity improvements that on average have been more than double the rest of the economy. Actual output is now much higher than 30 years ago.
The UK ranks second in the world for aerospace manufacturing with a 17% global share. In automotive, one in three of all Ford engines used worldwide are made in Britain. One British car plant produces more cars per year than the whole of Italy. That doesn’t sound like a country unable to compete on the world stage. The truth is that manufacturing in the UK has many strengths.
Manufactured goods obviously make up a large proportion of all exports and in some industries the vast majority of output goes overseas. The automotive sector is a good example with 80% of production exported.
Manufacturing growth is currently outpacing growth elsewhere in the economy and confidence has largely returned. Here at UK Steel Enterprise, where we invest directly in small growing companies, we are seeing that amongst our clients and also reflected in an increased demand for expansion finance. One area where the UK remains behind other developed countries though is in the level of new investment and that’s an area we are keen to support.
The money UK Steel Enterprise invests in growing companies is often used to finance capital investment and working capital to support growth and some of our recent completions have supported just this.
As the economy strengthens further, we expect more companies to invest for growth and to start expanding their workforce.
Such companies – those with opportunities to expand and create jobs – are exactly the kind of business that can benefit most from investment finance from UK Steel Enterprise.