Whether or not the recent figures issued by the Office of National Statistics (ONS) revealing that the UK is technically in recession are correct (many economists have questioned the data) is not the main issue at present. Chancellor George Osborne hasn’t yet been successful in tackling the current crisis and steering the UK towards a solid recovery. Some observers are even arguing the UK will now see 2% economic growth in 2016 and before then it’ll be pretty flat out there (the Bank of England is more optimistic though by stating the UK economy will start to grow at a rate of 2% or more per annum from 2013). So how long will it really take for the UK to recover? Macroeconomic factors such as the European crisis and the strong pound sterling do affect UK manufacturers, making business performance too hard to predict, especially in the technology sector.
Companies ought to focus on export (possibly outside Europe) and/or back UK OEMs that are growing globally. The UK is world leader in some niche markets such as high precision specialised professional equipment and very high end consumer products (think of Linn, Meridian, Naim) all designed and manufactured in this country. As electronics becomes more pervasive in cars, homes, factories, infrastructure – there will be more business for suppliers coming along with it. The trick is to build relationships with product designers and intellectual property owners as early as possible, starting from prototype or even concept phase.
Contract electronics manufacturing (CEM) has changed drastically in the UK, with companies now offering a range of specialised services and ‘whole product’ solutions. Simple assemblies and sub-assemblies are nowadays combined with entire box build, technical design and after market service, etc. Large UK CEMs with facilities across the globe can support customers with volume productions and global supply-chain solutions, whereas ultra-specialised UK-based CEMs are focusing on high level assemblies, NPI work and rapid prototyping. Relying solely on the UK domestic market could represent a risk in the short-medium term – as a result – UK contract manufacturers should start building strategic relationships with OEMs operating in those areas that are growing at present (e.g. China and North America) whereas the UK should still provide a fair amount of prototyping work which may lead to successful products.
Intellect members operating in the area see emerging markets in the UK such as energy, medical and industrial – all areas where it makes logistical sense to manufacture in the UK, either because of relative small volumes or due to engineering complexities. Hence the future is bright for sub-contractors as designers will always need a manufacturing base (possibly geographically close by) in order to solve technical issues and ultimately turn their work into reality.