UK manufacturers are positive and ambitious about their personal business plans for 2017, despite expectations that many of the economic risks seen in 2016 will carry forward to 2017, according to the UK manufacturers' organisation EEF.
The EEF's executive survey 2017 showed that almost half of the manufacturers were seeing more risks than opportunities in the year ahead. Some of these risks were particularly worsened by Brexit.
Among the risks seen in 2016, the most prominent ones were significant movements in exchange rates, economic volatility in major markets and uncertainty about the UK's place after leaving the European Union (EU).
With regards to exchange rates, the report said that the post-referendum weakness in the sterling had increased import costs in 2016, which had in turn led to higher construction costs. Manufacturers said this will continue to be a concern in 2017 and reduce their profit margins as it decides how much of these higher costs can be passed on to end customers.
With regards to economic volatility, the concerns raised by manufacturers were political uncertainty in Europe and Donald Trump taking over the role of US president this month. With regards to the former, manufacturers said apart from the Brexit vote, major elections in France and Germany to be held in 2017 were among their biggest concerns. With regards to the latter, they said Trump's policies could threaten growth in emerging markets, which in turn could weigh down heavily on global trade.
Despite these concerns more than half of the survey's respondents said their company would increase investment in technology and innovation apart from raising productivity through process innovations.
Meanwhile, 44% of the manufacturers said they would increase marketing efforts and brand promotions in 2017. An equal number of companies also said they would look at diversifying into the export markets in order to deliver their strategic business plan. Other actions noted by the UK manufacturers to achieve the same, include vertical integration, increasing revenues from services and diversifying into new supply chains.
Commenting on the survey findings, Terry Scuoler, CEO at EEF said in a statement, "Global political upheaval means that 2017 looks set to be another bumpy ride, with manufacturers forced to navigate uncertainty, unpredictable economic conditions and a number of risks that have been amplified by Brexit.
"Against this backdrop, a smooth journey is far from guaranteed, but firms are strongly attuned to the challenges and remain fully focused and determined to deliver their long-term plans for growth."