If 2023 goes the same way as 2022 it looks like another turbulent year for UK manufacturers. We all know the making manufacturing predictions for 2023 is likely to go horribly wrong, but here goes anyway!
Make UK/BDO made a forecast in their Q4 Manufacturing Outlook survey which shows manufacturing contracting by -3.2% in 2023. This comes on the back of a forecast -4.4% contraction this year, although Make UK stressed the number for this year is relative to a very strong 2021 which reflected the pandemic bounce-back.
What could be the key risks for 2023
There are several key risks that manufacturers may face in 2023 and beyond. Some of these risks include:
- Economic risks: Manufacturers may face continued economic risks such as rising raw material costs, fluctuating currency exchange rates, and uncertain demand for their products. This was a roller coaster last year and 2023 promises to hold the same uncertainties.
- Political risks: Changes in government policies and regulations, as well as political instability in certain regions, can create risks for manufacturers. This was brought into stark focus last year with the war in Ukraine, but with the US struggling economically, will we see further entrenchment in their US first approach?
- Technological risks: As technology continues to advance, manufacturers may face risks related to the adoption of new technologies, such as the need to retrain employees or the potential for obsolescence of existing products.
- Environmental risks: Manufacturers may face risks related to environmental issues, such as stricter regulations on emissions and waste, as well as the need to adapt to a changing climate.
- Supply chain risks: Manufacturers rely on complex global supply chains, and any disruptions to these chains can have significant impacts on their operations.
- Cybersecurity risks: Manufacturers are increasingly relying on connected systems and digital technologies, which can create risks related to cyber attacks and data breaches.
It is important for manufacturers to be proactive in identifying and managing these risks in order to protect their businesses and ensure long-term success.
What could be the key trends for 2023?
That said, as we look into the 2023 crystal ball, there are a few key trends which will support the evolution of manufacturers over the next 12 months:
- Increased automation and use of robotics: Many manufacturers are adopting automation and robotics technologies to improve efficiency, reduce labour costs, and increase the accuracy and consistency of their products. Sometimes counter intuitive, this adoption is creating new opportunities for the skilled resources in manufacturing.
- Greater emphasis on sustainability: Many manufacturers are focusing on reducing their environmental impact and increasing the sustainability of their operations. This may involve investments in renewable energy, waste reduction, and sustainable materials.
- Increased adoption of Industry 4.0 technologies: Industry 4.0 technologies, such as the Internet of Things (IoT), artificial intelligence (AI), and big data analytics, are being adopted by many manufacturers to improve efficiency and decision-making. We’ve heard lots about these things for over a decade now. In recent years we have seen the acceleration of the adoption, but will this rate of change continue this year?
- Continued globalization of supply chains: The globalization of supply chains is expected to continue, with manufacturers sourcing raw materials and components from a variety of countries around the world. This may involve the use of digital technologies to manage and optimize these supply chains.
- Greater focus on customization and mass customization: Many manufacturers are offering more personalized and customized products to meet the specific needs of their customers. This may involve the use of digital technologies, such as 3D printing, to enable mass customization.
This is backed-up with the Digital Catapult’s Manufacturing Leaders Poll 2022 which revealed that investment in deep tech solutions and a commitment to innovation remain top of the agenda for many business leaders across the UK manufacturing industries, despite economic headwinds. Manufacturers revealed their top tech priorities for 2023 are:
- Virtual and/or augmented reality (35%);
- Digital twins (28%);
- Blockchain and other distributed ledger technologies (26%);
- Additive manufacturing (26%);
- AI and machine learning (25%).
One buzzword I expect to gain more momentum over the next 12 months and yet at the same time create more confusion is the industrial metaverse.
The industrial metaverse is a virtual environment that is used for industrial purposes, such as training, design, and collaboration. It is similar to the concept of the “metaverse” that is often discussed in the context of virtual reality and video games, but it is specifically designed and intended for use in an industrial context. The industrial metaverse may be accessed through virtual reality devices or through a computer interface, and it can be used for a wide range of tasks, such as training employees, prototyping new products, or collaborating with colleagues from remote locations.
This mashes up multiple of the topics above into one overarching über term. No real frameworks currently exist, but for sure this is going to be another digital gold rush in the making in 2023!
Nick Leeder &Co would like to thank all our current and future clients a happy new year. We’re looking forward to looking back on the predictions above to see if they have come true….