UK manufacturers deliver £49bn productivity boost in 2023

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The UK manufacturing sector achieved productivity improvements worth £48.5bn in 2023, according to analysis of ONS data by FourJaw Manufacturing Analytics, a technology company that measures machine productivity

This represents an 8.6% increase on 2022 levels and includes multi-billion-pound improvements in automotive and food production output.

FourJaw’s analysis, which informs its UK Manufacturing Productivity Index, shows that the total value of UK manufacturing output reached £615bn in 2023. The end of 2023 was particularly strong, with manufacturers reversing a slight summer decline to produce goods worth £155bn in the final quarter.

Q4 2023 Productivity Performance in Major Manufacturing Sectors

  • The total value of UK manufacturing output in the fourth quarter of 2023 was £3.5bn more than the same period in 2022, a year-on-year increase of 2.5%, and £2.2bn more than in Q3 2023.
  • Output per manufacturer increased by 1.2% between Q4 2022 and Q4 2023, while productivity per manufacturer was up 1.0%. On average, each active UK manufacturer produced goods worth £1.13m in Q4 2023, up from £1.10m the year before. Output per employee was up 2.0% year-on-year.
  • The motor vehicles and transport equipment sector continued to deliver significant year-on-year improvements. It produced £3.9bn more output in Q4 2023 than in Q4 2022, supported by a 12.40% productivity increase worth £3.8bn.
  • Food manufacturing and alcohol and tobacco production also improved output and productivity significantly in Q4 2023. Food achieved a 6.3% productivity gain year-on-year worth £1.7bn, while alcohol and tobacco achieved a 21.4% productivity boost worth £1.0bn.

Chris Iveson, CEO at FourJaw Manufacturing Analytics, comments: “The manufacturing sector has demonstrated growth and resilience in the face of wider economic challenges. Manufacturers have realised they can’t hire their way out of a productivity problem and that manufacturing excellence is the only viable strategy for combatting supply chain uncertainty, high energy costs and skills shortages.”

“Manufacturers know they’re only earning when their machines are turning. They’re adopting technology to see what’s happening in their factories and using data to optimise processes and decision-making on both the top floor and the shop floor.

“Technology makes productivity progress possible, but the big shift is cultural. We see production issues solved faster thanks to better communication between operators and managers, better investment decisions based on an objective assessment of needs rather than hearsay, and manufacturers sharing data across departments to invite new ideas and inspire continuous improvement.”

Methodology

FourJaw’s data team analysed a range of data provided by the Office of National Statistics (ONS) to create a rolling five-year picture of output and productivity for the whole UK manufacturing sector and at the subsector and company level. Sources included the ONS’s index of production and producer price inflation datasets, and UK business activity, size and location statistical bulletins. Productivity levels were calculated by reducing the value of output figures by the corresponding inflation rate. Company-level figures are averages, based on the value of output and productivity per assumed active UK manufacturer at the time. Performance where indexed is indexed to Q1 2019 figures.

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