Technology can be a saviour for the manufacturing industry
Written by Kunal Sawhney, CEO, Kalkine
Manufacturing has been a critical part of the UK economy since the beginning, playing its role efficiently and making the nation a leader globally. In 2021, the sector accounted for 9.7% of the total UK economic output. The pandemic deeply bruised almost every industry segment, and its deep-rooted impact was also visible in the manufacturing sector.
The latest survey result of UK S&P Global-CIPS manufacturing purchasing managers has indicated that the manufacturing activity in the country has started picking up pace, albeit at a slower rate. The manufacturing purchasing managers’ index was at 55.8 points in April, higher than the level of 55.2 registered in March, its five-month low.
Inflation plaguing the growth
The survey result has highlighted the inflation worries, which continued to build pressure on the sector, with 85% of respondents reporting an increase in purchase prices and the input costs surging to the second-strongest rate in the survey history. For the last some, time there has been a continuous rise in chemicals, energy, metals, packaging, timber, and electronics along with foodstuffs, putting pressure on the input costs. Some respite was seen with ease in global supply chain constraints, but at the same time, other material prices continued rising. The rise in prices is acting as a drag on business costs amid skewed demand.
It has also highlighted the different headwinds the sector continues to face. The demand scenario in the domestic market has worsened, while the export orders weakened at the start of the second quarter. Supplier lead times continue to lengthen. The rising prices of raw materials have hit the producers, and it can reflect in the cost growth in the next quarter. A separate analysis has reported that 6 out of 10 businesses are all set to hike prices in the coming 12 months, which would further hinder household spending and bolster the cost-of-living crisis.
Technology can act as the saviour
Manufacturing has gone through revolutionary changes, and now it is an ever more automated and technology-driven industry. Throughout the industry, the application of advanced technologies and systems is being used, and now it is being said that it could see a fourth industrial revolution driven by data that is helping them increase productivity, simplification of production, and making the businesses become more creative.
The country’s manufacturers have entered a new era with the help of technology. There is growing interest in investment in manufacturing technologies. It is not a hidden fact that manufacturing has always had an appetite for technology. Now, all the game-changing advantages of modern technology like big data, artificial intelligence (AI), and advanced robotics are being used to gain a competitive advantage in the manufacturing industry.
The way ahead
The manufacturing sector at the time of recovery has been hit by the lockdowns in China and the Russia-Ukraine war when Brexit was already taking its toll; these global developments have derailed the growth momentum of the sector. A report has stated that over 130,000 manufacturing jobs have been lost during the pandemic, which could cost the sector almost £850 million.
However, the growth in manufacturing output and order books underlines the demand outlook of the sector. The government will have to support the manufacturers so that the downward trend in optimism can be restricted at the earliest possible. Some measures had been announced recently by Chancellor Sunak in his Spring Statement, but to combat rising cost pressures, businesses may need specific support before the Autumn Budget.
