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What do we really know?

The future of the manufacturing sector looked pretty gloomy at the end of 2015 according to the EEF & DLA Piper 2015 Q4 Manufacturing outlook report.  

As always, there are many factors which create volatile and sometimes unpredictable conditions in which to run a manufacturing business. Last year some of the reasons cited for a weaker manufacturing performance, particularly in the latter part of the year were weak domestic and international demand, the collapse of the oil sector and the strengthening of sterling. This all led to a drop in the amount of investment and hiring predicted across the manufacturing sector for 2016. 

We entered 2016 with weaker confidence and ongoing concerns about the impact of the increasing minimum wage, as well as the looming debate around a possible Brexit. 

Despite all of this, this week we hear good news. 

Markit’s PMI – Purchasing Managers Index  states that according to a poll of manufacturing businesses in January the score sits at 52.9. Better than December’s figures, in fact the best figure for the last three months across manufacturing, and notably better than the outlook in the EEF & DLA Piper 2015 Q4 Manufacturing outlook report.

The manufacturing sector is one that requires long term strategy and investment but is affected by many factors that are out of people’s control. What is a disaster for one business is great news for others. 

Take the price of oil - terrible news for any business supplying services or products in to the E&P sectors but great for the manufacturer whose energy prices drop.  

Or the recent weakening of sterling - not so good for holiday makers, but great news for manufacturers who export products that are sensitive to the value of sterling. 

My question is how predictable or unpredictable is a manufacturing business to run? And how much of this can be factored for by stronger management and leaders? 

As always your thoughts and comments are welcome!

 

Claire Lauder is the Director for Manufacturing & Engineering at Interim Partners. 

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