Manufacturers have improved productivity but more needs to be done, study says
24th February 2016
Manufacturers' organisation EEF say its members are making strides in increasing productivity, one of the key issues for the economy
Nearly two-thirds of manufacturers have improved productivity in the past two years, a new survey suggests.
The poll by manufacturers' organisation EEF comes at a time that productivity is becoming one of the most pressing issues facing the UK economy, with the country far behind competitors in Europe and elsewhere.
The EEF poll found that 64% of those surveyed had seen an improvement to their productivity in the past two years but highlighted a number of concerns that still exist.
EEF's report said that the main gains to be made by manufacturers are in their supply chain improvements and investing in plant and machinery, but many firms are being held back by uncertainty over the economy and by skills shortages.
Liz Mayes, North East region director at EEF, said: "While the UK economy as a whole has an issue with productivity, this report suggests that manufacturing is not the problem child.
"In the past two decades UK manufacturing has outpaced the rest of the economy for productivity growth and more than six in 10 manufacturers have grown their productivity in the last two years. This is the strongest indication yet that a more balanced UK economy could also be a more productive economy.
"Many of our industry's dynamic practices, such as continuous improvement, are clearly paying dividends. But it certainly is not job done.
"UK manufacturers are acutely aware that in a global economy productivity needs to be world-class and this means becoming even better at adopting and investing in major new advances in technology.
"Manufacturing has the potential to be a major driving force behind improving the UK's productivity performance. But while business is the driver, Government is the enabler, and this report highlights the real need for policies and a long-term, comprehensive industrial strategy to support businesses as they strive to reach their productive potential."
A report released last week revealed a "yawning" productivity gap between the UK and other countries.
Output per hour in the UK in 2014 was 18% below the average for the rest of the major G7 advanced economies - the widest productivity gap since comparable estimates began in 1991, said the Office for National Statistics.
In financial services, the UK was 5% more productive than Germany but 6% less productive than France and 22% less productive than the USA between 2010 and 2014.
In manufacturing, the UK was 24% less productive than Germany, 18% less productive than France and 45% less productive than the USA.
UK output per hour in 2014 was 5% lower than Spain and considerably lower than productivity in Ireland, Belgium and the Netherlands, said the ONS.
EEF's report - Productivity: the state of the manufacturing nation - reveals that over six in 10 UK manufacturers (64%) achieved productivity growth in the past two years, while 57% expect to make further gains in the next two.
The manufacturing sector's productivity growth outpaced that of the service sector and the UK economy as a whole in the two decades to 2014, EEF said, suggesting that the sector is not the source of the UK's weak performance.
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