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Opportunity knocks for exports, reshoring and supply chains

09 October 2014

The head of the CBI warns the golden opportunities for a renaissance in manufacturing could be undermined if the UK’s industrial strategy is not cemented for the long-term.

John Cridland
John Cridland

The molten metals of manufacturing have long coursed through the veins of the British economy. Despite having taken a knock during the recession, our manufacturers have bounced back, and are helping to build a strong industrial base that is vital to a rebalanced economy.

Optimism is running high, and parts of the sector are performing strongly – some have even surpassed their pre-recession peak. All this bodes very well, and there is a major opportunity for a manufacturing renaissance to play a significant role in supporting the UK’s growth. But this depends on rebalancing our economy in the right way.

A manufacturing renaissance
Firstly, we have a golden opportunity to boost exports. Targeting fast-growing markets is the best way to do this, and there are already signs of progress – for example, we now export 30 percent more goods to non-EU countries than before the financial crisis.

From cars to coats, UK manufacturing is on course to regain a bigger slice of the economy. We must not forget, or underestimate, how strong our brand is across the world, and how broad the potential is to sell what we do and make.

A second real-time opportunity is reshoring. Shifting global dynamics, changing customer needs and significant inflation overseas, not to mention the hidden costs and risks of lengthy supply chains, have presented many manufacturers with an easy win chance to grow by returning home.

Strengthening domestic supply chains would also provide huge opportunities for firms of all sizes. Proximity to key markets is incredibly important, and the potential benefits are enormous - we estimate that strengthened supply chains could create an extra half a million jobs by 2025.

To realise this potential, we have to redouble our international charm offensive and draw inward investment towards suppliers to boost capability and capacity across all parts of the manufacturing sector.

Energy and skills
Securing a manufacturing renaissance is not a racing certainty. Putting the sector at the heart of our economic growth strategy could be knocked off course by strong crosswinds.

Manufacturing is facing major challenges on energy – cost and security of supply. We must diversify and decarbonise, so we’re not relying on any one fuel or technology. The undoubted benefits of fracking must also be recognised and carefully exploited. And we need to help relieve the cost burden for energy-intensive businesses in manufacturing.

We have to grasp the urgency of the skills crisis, which feels like a car crash in slow motion. As engineers hang up their hard hats and head for retirement, we simply don’t have enough of the next generation coming through.

It’s absolutely critical that skills funding is more closely aligned with the needs of industry, and that the immigration system better reflects our need to attract international talent, while home grown talent is being developed.

CBI Director-General, John Cridland was speaking at the CBI’s Manufacturing Conference, Manufacturing our Future – Solutions for Success, at JCB in Staffordshire, where he stressed the importance of the sector to the wider economy, highlighting exports, reshoring and supply chains as growth areas.

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