2023 proved to be a formidable year for manufacturers as they faced challenges stemming from inflation, skills shortages, and supply chain instability. Despite the hurdles, businesses concluded the year on a note of cautious optimism.
As per Lloyds Bank’s Business Barometer, the manufacturing sector closed 2023 with a confidence reading of 38%, indicating a notable increase from the beginning of the year, when confidence stood nine points lower. Dave Atkinson, Head of Manufacturing at Lloyds Bank, shares insights into the industry’s outlook and outlines key priorities for businesses in the upcoming year.
Prioritizing Technology Investment
In the dynamic landscape of 2023, advancements in AI, the metaverse, and big data were prominent, and the trend is expected to continue in 2024. The imperative of digitization for staying competitive is more apparent than ever.
The December Business Barometer revealed that nearly a third (30%) of manufacturers identified the introduction of new technology as their primary growth target for the next six months. Investing in technology not only enhances operational efficiency but also boosts productivity and reduces costs.
For instance, integrating the Internet of Things (IoT) into factories and investing in connected machinery empowers manufacturers to collect valuable data, offering insights into areas where time or materials are being wasted. Predictive analytics can even identify components at risk of malfunction, allowing for preemptive repairs and replacements, thereby minimizing downtime and maintenance costs. In the year ahead, an increasing number of firms are expected to adopt such technologies, making them standard practice across modern factories.
Manufacturers who neglect the prioritization of digitization risk falling behind, while those who seize the opportunity to bring new technology innovations to market can tap into the demand from customers eager to be early adopters.
Tackling the Skills Shortage
Staffing challenges persisted in 2023, and the shortage of 74,000 factory workers is projected to cost the UK economy £6.5 billion annually in 2024. Addressing the skills gap remains a critical imperative for manufacturers.
Currently, only 26% of those in manufacturing roles in the UK are women. Unleashing the potential within this underrepresented demographic can significantly alleviate the skills shortage and enhance diversity within the sector. Equally vital is the focus on cultivating young talent.
The Advanced Manufacturing Training Centre (AMTC), with support from Lloyds Bank, has played a crucial role in building a pipeline of future talent. Training over 3,000 apprentices, graduates, and engineers to date, the AMTC aims to surpass 6,000 by 2030.
Sustainability Opportunity
The landscape is evolving in terms of sustainability requirements, with an increasing number of manufacturers viewing it as a growth opportunity. By eliminating carbon emissions from factory floors and manufacturing processes, businesses can carve out a niche and gain a competitive advantage.
Large businesses face mounting pressure to disclose emissions, including those associated with their supply chain. Smaller manufacturers can position themselves favorably against global suppliers by producing a sustainability statement showcasing decarbonization efforts or lower emissions compared to industry counterparts.
Moreover, there is a growing trend among the UK’s top talent to seek employment with companies actively contributing to climate change mitigation. Enhancing sustainability credentials may offer manufacturers the chance to attract skilled individuals.
While challenges persist from 2023, the manufacturing sector is poised for an exciting year ahead. Lloyds Bank remains committed to supporting manufacturers as they invest in technology, prioritize sustainability, diversify, and grow.