Kevin Rooney, head of the Newcastle office manufacturing sector team at RSM, looks ahead to what 2019 has in store for the sector.
Kevin believes that ‘unlocking the trade deadlock’, ‘people pressure’, ‘thinking global’ and ‘digital change’ are likely to be high on the priority list for manufacturers in the North East. With these in mind, he has a positive prediction for the sector for 2019.
Unlocking trade deadlock
This year’s Brexit negotiations has extended a period of unprecedented uncertainty for manufacturers both here in the North East and across the UK and it is hoped by many across the sector that we see some movement towards clarity regarding what trading will look like post-Brexit. Unlocking trade deadlock will allow businesses to plan effectively; take key investment decisions; and expand into new markets to futureproof their businesses in a new trading environment – whatever that looks like.
People pressure
As potential labour markets across the EU will be closing, this, combined with an ageing workforce, could see the skills shortage in the sector reach acute levels in 2019. It’s basic supply and demand. With less migrant workers coming to the UK there will be an increase in competition for jobs in the region. The need for new roles to support digital investment will also add to the pressure to recruit the best people. This will not only impact productivity and efficiency, but the additional recruitment costs will apply further financial pressure on the sector.
This could see manufacturers investing in capital improvements to reduce the reliance on workforce and improve productivity; all set against the conundrum of uncertainty which reduces the confidence to invest, so a courageous approach will be necessary.
Think global
With uncertainty on home soil many manufacturers are looking towards global markets to maximise favourable exchange rates and secure long-term growth. But with many looking to Europe, the US and Asia markets, macro developments including Brexit and the trade spat between the US and China could make global expansion trickier in the short term. However, trading internationally will give manufacturers in the North East the chance to diversify business models, spread risk, access new customers and find greater returns, so 2019 could be the year for thinking global.
Digital change
It can be a disorientating task to keep up with the current pace of digital change. Many manufacturers don’t understand how digital applies to them or what they need to do to become a digital business. Many struggle to embed digital change because they don’t know where to start or because they don’t have the skills or management time to devote to it.
Business leaders, finance leaders and IT leaders within manufacturing businesses can kickstart practical digital change initiatives. Creating a digital strategy, digitising the finance function, and acquiring the skills needed to drive digital change on the ground and manage the risks can all ensure that the region’s manufacturers don’t risk being left behind.
Keep calm and carry on
Now, more than ever, Britain needs to capitalise on the high acclaim that a Made in Britain badge holds and maximise global opportunities. Despite uncertainty, manufacturers are resilient; and in unfavourable trading conditions the heart of the UK economy will innovate and thrive – building on an already impressive manufacturing base, the sector will keep calm and carry on.
If you're interested in what RSM can do for your manufacturing business in 2019 then why not contact Kevin Rooney at kevin.rooney@rsmuk.com or your usual RSM contact to discover more about how we can help you.
