KPMG survey findings showed that 62 per cent of UK manufacturers have delayed or paused investment as a result of Brexit.
Three in five UK manufacturers believe Brexit has impacted potential investment into their business, according to a new report by professional services firm KPMG.
The survey findings showed that 62 per cent of UK manufacturers have delayed or paused investment as a result, with automotive respondents reporting the highest hardest blow, at 78 per cent.
Commenting on the findings, Stephen Cooper, Head of Industrial Manufacturing at KPMG UK, said: “Recent headlines have shown just how much the automotive sector in particular is feeling the pinch and this was echoed by our findings. For all manufacturers, however, the threat of global competition has always been in the background, irrespective of Brexit. Factors such as macroeconomic trade wars, regulation, technology and the fast pace at which the world is moving means that manufacturers must be more competitive and agile if they want to remain viable and thrive. Disruption is everywhere, but if viewed as an opportunity and navigated strategically, it can help businesses retain the edge the UK needs to have on its international peers.”
Should I stay or should I go?
The report also found that over half of UK manufacturers (54 per cent) are planning to move some aspect of their operations abroad in the next three years.
Cooper commented: “With squeezed margins, productivity challenges and a tumultuous geopolitical environment, it’s little wonder that manufacturers are unsettled. However, it’s rarely ever one way traffic, so whilst some may be looking at other destinations, the UK has many redeeming qualities for manufacturers, so they must ensure that any moves being planned are for strategic reasons.”
Attractive to international investors
UK manufacturing currently makes up 10 per cent of UK output* and relies significantly on international investment to power productivity, innovation and growth. The report found that almost half of UK manufacturers (44 per cent) believe that the UK’s quality of infrastructure, talent and skills are drivers for international firms choosing to invest.
Cooper explained: “The UK’s attractiveness to international firms should not be downplayed. For it to be sustainable in this environment, however, more can be done, such as further Government support to strengthen infrastructure and international connections and a focused effort on strategic growth, productivity, skills and innovation.”
Competitiveness key for future growth
“Whilst nobody can predict the future, there are steps the UK’s manufacturers can take to achieve their growth ambitions and become more competitive both nationally and globally. Whether it be through identifying areas to experiment, collaboration and partnerships or investing in people, processes and technology solutions, manufacturers should focus on what they can do now to achieve that all-important competitive edge,” concluded Cooper.
Notes to editors:
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About KPMG’s Future of Manufacturing report
KPMG’s Future of Manufacturing report is based on an online survey of 300 UK manufacturing decision makers, ranging from c-suite executives to financial controllers, conducted between 2 and 22 October 2018. All firms are large to medium sized manufacturing businesses based in the UK with annual revenue exceeding £10 million. The survey included all manufacturing industries across the UK, with a focus on industrial manufacturing, automotive, aerospace and defence, FMCG & retail and technology manufacturers.
About KPMG UK
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 16,300 partners and staff. The UK firm recorded a revenue of £2.338 billion in the year ended 30 September 2018. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.