Despite uncertainty, manufacturers need to invest in the future now

After hitting a three-month low at the start of the year, the latest CIPS Manufacturing PMI signals slight improvement for manufacturers moving to 55.1 from 54.1.

Increased pressure on already stretched supply chains

The latest results show stronger pipelines of work across the sector with the volume of new order numbers expanding. Whilst this is hugely positive news, the added pressure this has put on supply chains that were already grappling with operational disruption and in some cases, raw material shortages can be seen clearly through the lengthening of supplier delivery times within the survey results.

Investing for the future

Despite uncertainty, the fallout of Brexit and lockdown restrictions, current financial conditions do present an opportunity for manufacturers to make long-term strategic investments to enhance productivity and production in the future.

When you consider low interest rates and adjust for inflation, the cost of new debt may well be negative over the lifetime of the debt; so now is the time to act. Pull forward investments in technology, equipment and intellectual property to bolster long-term prospects and maximise the small silver lining that the current financial conditions provide.

The budget

As we look ahead to this week’s Budget, manufacturers will be hoping for urgent support to tackle the acute Brexit and Covid-19 pressure; longer-term commitment to strengthen the industrial base in the UK with skills, tax incentives and job creation at the heart of any policy changes; and improvements in digital connectivity to support the future growth of the sector.  

For more information please contact Mike Thornton, Head of Manufacturing at RSM.