UK to remain primary location for high value manufacturing activity, says survey
November 26th 2007 A major survey has shown that high value manufacturing activity will continue to remain in the UK in five years time, confirming that the sector will still play a key role in a high value modern economy.
The survey of six hundred companies has been published by EEF, the manufacturers’ organisation as part of a study on High Value Manufacturing in the UK. It highlighted that manufacturers are becoming ever more complex and sophisticated businesses with the integration of a number of activities.
In activities such as research, design and development and service provision almost 90% of companies said that the primary location would remain in the UK. The survey also showed that, even in the area of production and assembly, while there would be some moves to low cost economies, seven out of 10 companies primary location would still be the UK.
“This survey confounds the myth that manufacturing is on a fast boat to low cost economies with little physical production left in the UK," comments EEF chief economist, Steve Radley.
"While it is inevitable that some production will move to lower cost countries, the UK will still retain a substantial level of high value activity. Companies are shifting into activities such as research design and development and developing service offerings that leave them less exposed to competing on price with low cost countries.”
However, the survey also showed that the association with the UK among foreign owned companies was much weaker, especially in the areas of design, development, research and marketing, where only half saw the UK as the main location. This reflects the fact that companies with mainland Western European owners are more likely to locate these activities in mainland Western Europe than in the UK. No significant change is expected in five years’ time. Similarly, companies with their headquarters in Asia were most likely to base primarily their research in the same region.
“This highlights the fact that countries such as India and China are increasing their design and development capabilities. It illustrates the importance of maintaining an internationally competitive environment in the UK if it is to continue attracting these activities” added Mr Radley.
The survey also examined where manufacturers see their competitive strength now and in the future. Currently, production and assembly was the most frequently ranked as the number one source of competitive advantage, ranking highest for 29% of companies, followed by design and development (23%) and service provision (18%)
However, the results showed a clear shift towards innovation driven activity with design and development expected to overtake production in the next five years as the key competitive activity. In addition, the survey backed the increasing evidence that manufacturers are becoming more complex businesses with the provision of services increasing to a close third behind production.
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