Manufacturing decline - how can the sector recover?

22nd October 2020
Posted By : Lanna Cooper
Manufacturing decline - how can the sector recover?

Following news that UK manufacturing activity continued to decline in the three months to October, as revealed by today’s CBI Industrial Trends Survey, Rafi Billurcu, Partner Head of ERP & Platforms Europe and Head of UK Manufacturing at Infosys Consulting, shares his thoughts.

“The manufacturing industry continues to experience tough conditions, but some sub-sectors are suffering more than others. Aerospace has been drastically affected due to coronavirus restrictions halting travel and airlines minimising operations as much as possible. But it’s also sectors like automotive and construction - based on long term, consumer driven decision-making, that are feeling the hit due to their products being quite capital intensive.

“Brexit uncertainty also continues to threaten the manufacturing sector’s growth. With the majority of UK export markets based in Europe, we’re seeing countries like France and Germany prioritise their internal demand ahead of UK orders. Another major reason behind a drop in export numbers is the prospect of a no-deal, with markets hedging their bets and evaluating alternative sources to import. 

“Support from the Government is crucial in such challenging time. Whether in terms of Brexit or subsidies, everything will help. 

“However, manufacturing organisations can also take steps to improve their outlook. Moving to a servitisation model can reduce the reliance on making heavy investments into products and allow manufacturers to focus on just the services and outcomes. Automotive companies have already been doing this over the last few years, focusing on mobility-as-a-service rather than just relying on the traditional car sales model. This has not only unlocked new revenue streams and increased profitability; it’s enabled them to tap into the Gen-Y (millennials) sector early on.

“Taking steps, big or small, to drive digital transformation is also crucial. Manufacturing organisations should aim to harness the power of AI, automation and blockchain, in order to speed up time to market and reduce costs caused by slow, rigid and outdated IT ecosystems. 

“Climate change and carbon neutrality will also be strong drivers for growth moving forward as consumers demand more eco-friendly products. Manufacturers must ensure they focus on establishing a more sustainable manufacturing process. This could certainly serve as their point of differentiation moving forward, targeting more environmentally conscious consumer segments.”

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