Brexit and the UK manufacturing industry – what will happen in 2020?

Published: 4th January 2020

The manufacturing industry is experiencing significant change as it struggles to deal with the effects and uncertainties surrounding Brexit. Replacing skilled workers who have returned to the EU, developing a technological base that meets new logistical needs, and sourcing the right type of finance to expand, are just some of the issues being addressed by the industry.

We are nearer to a known Brexit outcome as we enter the new decade, at least in terms of a narrower timetable, so what will the industry look like in 2020, and what are the key challenges and potential solutions for manufacturing businesses in the UK?

Investment in Artificial Intelligence (AI) and robotics

As manufacturing businesses invest more heavily in Artificial Intelligence - whether to increase productivity, streamline operations, or replace vital EU workers – a holistic approach will be crucial to ensure systems are fully integrated and meet the needs of this fresh operating landscape.

Against a backdrop of developing trade partnerships, producing high quality, competitively priced goods using cost effective systems will be essential for survival. Robust enterprise resource planning (ERP) software will be at the heart of change, allowing the features and benefits of artificial intelligence and complex digital systems to be utilised to their fullest.  

The complexity of robots, particularly collaborative robots (or cobots), will need to be reduced or removed so that manufacturing businesses unsure of whether to make the investment understand its benefits and gain confidence.

They can then take small steps towards automation using new technologies, and invest over a longer period of time – the result being production lines with more robots working alongside staff with the knowledge and training necessary to control output from labour intensive procedures.

Logistics and product tracking after Brexit

Supply chain efficiency is a key issue for UK manufacturers and if border checks are reintroduced, lead times are likely to be affected, creating a need for new processes. Again, automation will play a key part in implementing this change, allowing forward thinking manufacturers to get ahead of their competition in terms of efficiency and reliability.

The application of World Trade Organisation (WTO) Rules of Origin mean manufacturers must develop product-tracking processes that provide transparent information for the authorities about the origin of their products, given the new trade routes and deals to be done.

But what about the financial aspect of this investment in automation and new systems of work? How will it be funded?

Financing investment and potential change

Securing the finance required to invest in artificial intelligence and robotics, and indeed the enterprise software manufacturers need to control such systems, is a major consideration for manufacturing in 2020. The banks’ continuing reluctance to lend, coupled with the specific operational nature of manufacturing businesses, makes alternative finance an attractive option.

The industry’s reliance on heavy machinery and equipment means asset-based lending is a strong possibility, but various forms of invoice finance also exist that would support expansion for eligible manufacturing businesses.

Begbies Traynor is the UK’s largest professional services consultancy, and helps manufacturing businesses across all sectors. We have professional connections with over 50 finance lenders around the country, and can provide the reliable advice you need to make sure your manufacturing business thrives in 2020.

We also operate an extensive network of offices around the UK, so if you are worried about the future of your manufacturing firm, please call one of our partner-led team to arrange a free same-day consultation.

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