With negative news stories currently dominating the media landscape, it’s refreshing to see the Welsh manufacturing industry making headlines in 2018 for the right reasons.
From North Wales-based Nice-Pak to TATA Steel in Port Talbot, manufacturing is deeply embedded within the roots of the Welsh economy. UK manufacturing hasn’t always been perceived as a thriving industry; the 2008 recession resulted in a significant dip in output, with skills shortages also topping the agenda as a challenge to overcome. In recent years however, we’ve seen a marked turnaround, with UK manufacturing now at its highest output in a decade.
The manufacturing industry in the UK is particularly prosperous; as the world’s eighth largest industrial nation, current indicators suggest that we will enter the top five by 2021. In the UK, manufacturing makes up 11% of GVA, 44% of total UK exports and 70% of business R&D, directly employing more than 2.6 million people – and Wales is seeing the benefit of this growth with a rise in investment and opportunities.
One such investment within the area is the £8million ASTUTE 2020 research initiative launched by the Welsh Government. Run by Swansea University, the scheme is aimed at growing and developing collaborative research between Welsh universities and businesses. The hope is that these collaborations will address future manufacturing challenges and opportunities to drive productivity and growth by developing new, sustainable technologies and higher-value, competitive goods and services for the global market.
As well as the ASTUTE 2020 scheme, the Welsh Government investment of £4million in Tata Steel has helped to boost skills in Port Talbot, and the world’s first compound semi-conductor cluster has launched in Newport, with a £37.9million investment made by Cardiff Capital Region City Deal. This has the potential to create up to 2,000 high-skilled jobs and leverage £375million in private sector investment.
North Wales, too, is seeing significant growth, with a second Advanced Manufacturing and Research Institute planned for the region through the Welsh Government. The Modern Industrial Strategy introduced by the UK Government is starting to produce results with the aim of revolutionising manufacturing areas across Wales.
Brexit is a UK-wide challenge impacting all industries, although possibly none more so than manufacturing. It has been suggested that one of the reasons for the positive boom in the manufacturing industry in recent years is the weak pound – exports have become cheaper, which is more appealing to overseas buyers. However, on the other side, importing has become more expensive and after Brexit, further expenses may well lead to a stacking up of costs — such as custom fees or the end of tariff-free trade.
While some may say new opportunities will come out of Brexit, such as potential business with lower-cost suppliers in countries such as China, there is still uncertainty, and most businesses are signing short-term contracts clarity is found on the current situation. The 2016 MHA survey revealed that 60% of Welsh businesses remain optimistic about their growth prospects, with 36% expressing concerns over the negotiation of our exit from the EU.
Skills shortages are another issue which could well be compounded by Brexit. We’re seeing a lot of skilled workers coming up to retirement age, and there aren’t enough individuals studying manufacturing-related courses to replace them. Since Brexit, there has been a big dip in workers coming for the EU, which when paired with the current skills shortage in the UK is having a negative impact across the supply chain.
Businesses need to look at the next generation to help them prepare for life after Brexit. By engaging with educational institutes to educate young people about careers within the manufacturing industry and fully investigating opportunities for apprenticeships and non-traditional career routes, businesses can build up their workforce and demonstrate that they have the skills necessary to attract prospective clients and help safeguard them post-Brexit.