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NBCC Insights: "Manufacturing: Making it globally". New study by DLA Piper's Manufacturing Group

25-09-2014

2014-09-25

MANUFACTURING: MAKING IT GLOBALLY

Manufacturing is at the core of the UK economy. Despite mixed performance over the past two decades, UK manufacturing is currently strong and growing both in productivity and profitability. Today, over 2.6 million people in the UK work in manufacturing, accounting for around 11% of UK Gross Value Added (GVA) and 54% of UK exports. The composition of UK manufacturing is changing, with basic metal industries contracting, while advanced manufacturing sectors have grown considerably. Almost half of the UK’s manufacturing exports, accounting for £186.6 billion, come from five sub-sectors (mechanical and electrical equipment; chemicals; transport; metals; rubber, plastics and non-metallic minerals).

While exports are important, the internationalisation of UK manufacturing undoubtedly represents the next phase in growth, and the stakes are high in terms of risk and reward.

A report recently published by DLA Piper and Sheffield University starts by exploring why manufacturers extend internationally. The report then identifies four different motivations for developing international operations, but finds that such motivations must be aligned to the wider corporate strategy and be endorsed by top tier management or C-Suite (so called because of “chief” officers of whom it comprises) if they are to be successfully enacted. The four key motivations are:

                        Growth ambition (opportunity)

                        Customer-led

                        Market presence

                        Supply-chain co-location

The report highlights that there is no single or preferred approach towards developing international operations, but rather a series of factors that were common to many of the large manufacturers consulted during the research. The findings differentiate between strategic and operational factors, and highlight the importance of thinking about the drivers and challenges of international growth. If the future of UK manufacturing is to realise its potential and be competitive on a global stage, then manufacturers need to develop operations on a case by case basis. Managing internationalisation is hard and if UK manufacturers are to succeed, they need to be responsive and flexible, both internally and in relation to the changing contours of the global economy.

The full report MANUFACTURING: MAKING IT GLOBALLY, can be obtained by contacting the NBCC here.

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