MANUFACTURING OUTLOOK LLOYDS BANK EXPERT VIEWS
The pandemic, plus Brexit, have made 2020 a challenging year for UK industry
Huw Howells, MD, head of manufacturing and industrials, corporate and institutional
coverage, Lloyds Banking Group
But, in a sign that the government’s support
for businesses has helped mitigate some of
the pandemic’s most immediate economic
consequences, two-thirds of manufacturers
told us they had furloughed staff, while
nearly half had accessed government
Indeed, British manufacturers are
resilient and were able to rapidly
adapt to the new landscape.
They also told us about the plans
they are progressing to build back
better, and there is much cause for
optimism for 2021 after the challenges
Three-quarters (74%) have already
enacted or developed plans to use the
disruption to make their business more efficient.
That’s especially encouraging because Britain has
been stuck in a productivity slump since the financial
downturn of 2008.
With the end of the Brexit transition period
upcoming, it’s more important than ever that British
manufacturers become as productive as possible to
stay internationally competitive.
And boosting efficiency will be vital to ramping
up output again, especially as so many firms have
had to cut jobs.
Innovation and ambition
At the same time, more than half (56%) have either
maintained or ramped up their R&D investment,
with almost half (48%) expecting new products and
services to drive their growth.
“Let’s not forget the heroic efforts of those
manufacturing businesses that have stepped
up to the plate during lockdown.”
The coronavirus pandemic created
unprecedented challenges for
manufacturers and, though the sector
enjoyed some exemptions from certain
lockdown constraints, for some the
adversity may sadly have proved
Falling consumer confidence,
supply chain disruption and trade
and travel restrictions meant
manufacturing output was down
almost 30% in April (https://bit.
ly/2J7vmVU) and, while it has
rebounded since, the sector is still
facing severe challenges.
Many of Britain’s biggest
manufacturers are adjusting production
to meet reduced market demand, which may
mean restructuring their businesses or even closing
But let’s not forget the heroic efforts of those
manufacturing businesses that have stepped up to
the plate to keep the nation supplied with essentials
A voice for manufacturers
We believe it’s important that manufacturers
have a voice to share what’s leading their
agendas, which is why we surveyed more than
200 executives at large manufacturers (those
with a turnover of £50 million and above) for
our recent Business in Britain report.
This insight also helps us shape our own
strategy on how best we can support the
The survey responses were sobering, if
not entirely unsurprising: two thirds had seen
revenues fall, by an average 20%.
This likely reflects the UK’s strength in
aerospace and automotive, sectors that were
hit hard by travel restrictions and low consumer
confidence. We also have many leading
pharmaceuticals and food and drink businesses,
which have fared much better.