Member Article

Yorkshire manufacturers urged to exploit high growth ranking

Global manufacturing executives rank the UK as one of the top destinations for future profit growth, ahead of established manufacturing economies such as Japan and Germany, and high growth economies including India and Brazil.

KPMG’s 4th annual Global Manufacturing Outlook, which surveyed 335 executives globally, also reveals that companies are increasingly looking to the UK to provide key skills and resources in the supply chain, with the UK being the third most popular destination for increased sourcing.

Asked where they expect to derive the majority of their profit growth from over the next two years, the majority of respondents named the US (40%) and China (27%), followed by the UK (14%), Brazil (12%), Japan (12%) and Germany (11%).

David Morritt, audit partner and manufacturing sector head at KPMG in Yorkshire, commented: “Given the importance of manufacturing to Yorkshire’s prosperity, it’s imperative that manufacturers in the region exploit the advantages the UK is being credited with providing on a global stage.

“The UK’s relatively low corporate tax rate and the good IP protection provided by our legal system for businesses trading here are both attractive factors.

“The latter may not be said with the same degree of confidence for a number of the high growth economies.

“In addition, over the past few years, the weak pound has made UK goods relatively cheaper in the global marketplace. These advantages have contributed to the year on year increase in exports since 2009.”

The survey also reveals that the UK is in the top three most popular sourcing destinations with 16% of respondents saying they expect to source more here; higher than Germany, India and Brazil. China and the US still lead though, with global manufacturers seeking to increase sourcing in those countries by 34% and 37% respectively.

Of those who expect to increasingly source from the UK, 92% said this would involve research and development (R&D) and 81% said the investment would include product design and development. The majority said the goods would involve significant intellectual property (75%).

In addition, when asked what the most important factors determining the geographic location of R&D investment were, IP rights protection and financing options were cited as primary concerns. The availability of skilled talent (33%) was more than twice as important as government and tax incentives (15%).

According to the report, the top strategic manufacturing sector priority is reducing cost structure, even ahead of sales growth. When asked about which priority areas of cost-control they will be pursuing, 40% of global companies and 45% of UK manufacturers cited reducing labour force costs.

This was posted in Bdaily's Members' News section by Mark Lane .