Input costs are biggest concern for UK manufacturers

Will Green is news editor of Supply Management
13 January 2014

14 January 2014 | Will Green

Input costs - particularly energy prices - are the biggest concern for UK manufacturers with almost two thirds of firms fearing they are a risk to growth plans, according to research.

The EEF and Aldermore Bank Executive Survey 2014, out this month, revealed that the proportion of firms worried about input prices increased from 57 per cent in 2013 to 61 per cent.

Among metal producers a higher proportion of 72 per cent were concerned about materials costs, while across the board companies saw rising energy costs as the biggest risk.

Meanwhile, almost a quarter of firms were worried about insufficient supply chain capacity, with a similar proportion of small firms not planning to invest in the next year, “reflecting the hollowing out of the UK supply base and the need to build it back again,” said the EEF.

But two fifths of companies said they planned to invest “moderately” in the UK, and a further fifth said their investment would be “significant”. Half of firms said they planned to work more closely with suppliers to address supply chain risks.

The survey, covering 200 senior executives, also revealed 70 per cent expected the UK economy to improve in the year ahead, with 62 per cent expecting manufacturing prospects to improve. Two thirds predict domestic sales will increase this year and 55 per cent believe export sales will grow.

However, following the prolonged downturn, three quarters of firms believe “economic uncertainty is the new norm”.

Terry Scuoler, EEF chief executive, said: “Manufacturers are telling us they expect to make a greater contribution to growth, investment and jobs this year. Innovation, energy and diversifying into new supply chain remain key opportunities, but the UK and the eurozone are also looking better. However, global uncertainty and rising energy costs pose significant risks and the challenge for industry and government this year will be to get industry’s investment plans over the line.”

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