Viewpoint: Why manufacturing is not a sunset industry
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Once at the forefront of the industrial revolution, the UK’s manufacturing industry was, until recently, almost in danger of becoming an economic irrelevance.
While it is true that this sector has declined in recent years, the UK remains the world’s sixth largest manufacturer with manufacturing accounting for 13 percent of GDP (gross domestic product) and over 50 percent of exports1.
Yet, despite these impressive statistics, the sector fails to attract the recognition it so rightly deserves. Guy Gilfillan, Head of Lambert Smith Hampton (LSH) Sheffield explains.
Over the past decade, UK manufacturers have witnessed some enormous challenges, including skill shortages, fierce competition from emerging markets, fluctuating energy prices and, more recently, tough credit conditions.
An over-zealous approach by developers to build high-value distribution facilities not necessarily suited to manufacturing and the Government’s abolition of Empty Property Rates Relief has also exerted unnecessary pressure on the industry.
However, with Sterling currently at its lowest level against the Euro since March2, UK manufacturing could be looking at a period when it can now fully compete overseas. It is essential then for the property sector to recognise that it could be about to witness a resurgence in demand from industrial companies.
Manufacturing is evolving into an increasingly technologically advanced sector. With this nowhere more prevalent than UK Strategic Partnerships and Yorkshire Forward’s über-successful Advanced Manufacturing Park (AMP) development on the Rotherham-Sheffield border in South Yorkshire.
Over the past five years, the development has evolved into a location of choice for a rich mix of world-class manufacturing, technology and materials organisations, including the likes of Boeing, Rolls Royce, CTI and, more recently, Dormer Tools. Recent deals include lettings to Arrow Technical, Atranova, Struers and Xeros.
What AMP demonstrates is that the days of industrial powerhouses and standard-use sites and facilities are long gone. The focus has now shifted towards smaller, niche businesses, creating lower volumes of specialist products. The majority of which are then shipped abroad for assembly and distribution.
As such, today’s manufacturers are demanding an entirely different approach towards property occupation. Traditional industrial units are consequently inadequate and inefficient to operate. Heavy plant and machinery often requires reinforced foundations and substantial power facilities in order to ensure its smooth running.
Manufacturers have also recognised the need to address any negative impacts their business may have on the environment and are increasingly looking to their facilities as a driver for carbon reduction. They no longer require the amount of floorspace they once did and not only do over-sized premises result in unnecessary costs but also generate wasted energy.
Investment in research and development is another vital strand of the industry’s success and so businesses need appropriate premises to allow them to evolve. Clean rooms, IT suites and a higher proportion of offices are often now required by occupiers.
What has become abundantly clear is that manufacturing is vital to the long-term success of the UK economy and that a ‘one size fits all’ approach is no longer feasible.
1 Lord Davies of Abersoch. Launch of UK Advanced Engineering International Marketing Strategy. London. 11 March 2009
2 "Sterling extends losses, hits lowest vs euro since March." Reuters. Monday 12 October 2009. Web. http://www.reuters.com/article/europeanCurrencyNews/idUSLC28029120091012
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