A decline in business optimism caused by economic uncertainty and Brexit confusion is holding back manufacturers from investing in vital technology improvements, and this could seriously impact future growth across the sector.
This is according to Jason Chester, Director of Global Channel Programs at InfinityQS, the global authority on data-driven manufacturing quality, who states it is imperative manufacturers understand the importance of investing in digital transformation across the shop floor.
CBI’s most recent Quarterly Industrial Trends Survey, suggests that despite a significant increase in the IHS Markit PMI (rising to a six-month high of 54.2 in December), business optimism in the quarter to January has fallen sharply, with export prospects dropping at the fastest rate since the financial crisis. However, this is mainly due to manufacturers stockpiling materials to prevent potential supply chain disruptions caused by Brexit.
With spending on buildings, plant & machinery, training and innovation all expected to be lower in the year ahead, Tom Crotty, Group Director of INEOS and Chair of CBI Manufacturing Council suggests: “Uncertainty has sadly become the norm, and this is holding back growth and investment in the manufacturing sector…it is vital the Government finds a positive solution to the current Brexit deadlock so firms can continue to compete both at home and abroad.”
In response, Jason offered some advice for manufacturers who may be feeling pessimistic about the future:
“While manufacturing business leaders are curtailing investment as a result of political confusion and economic uncertainty, this is perhaps the worst thing they can do right now. Digital transformation delivers significant operational improvements which can provide valuable insulation against future risks by creating an operating environment that is lean, efficient and agile. Manufacturers that invest in the right technologies, can ensure that a competitive edge is maintained, and this will be essential to thrive in a challenging and uncertain economic climate. It also allows them to replace manual processes with a more automated approach, further reducing risks of low-cost labour and talent shortages.
He continued: “Increased agility and flexibility within the production environment will greatly help manufacturers to mitigate future market risks by creating the foundations to respond to events that cannot be foreseen during times of uncertainty.
“Manufacturers and business leaders need to devise an investment strategy that will safeguard their business through this turbulent period. Investment in digital transformation initiatives should not be put on hold but prioritised and accelerated to build an infrastructure that can sustain and navigate future instability. While market and economic conditions are outside a manufacturers control, investing to mitigate potential risks is absolutely under their direct control.”