What does the Brexit vote mean for UK manufacturing going forward?

It’s impossible to escape the news: the people of the UK have voted, with a majority of approximately 52% to 48%, to end our membership of the European Union, aka ‘Brexit’. Before this historical referendum, we looked at some of the opinions of those within the UK manufacturing trade on whether we should stay or go.

Now, with the outcome in place, we can start to really look at what will happen within UK manufacturing and what kind of effect we can expect to see. At Corrotherm, we face challenges head on and look for ways to remain positive. After all, British manufacturing holds a strong position in the global economy; despite pre-referendum reports of a slowdown in the industry, the UK held on to its position as the 7th strongest manufacturing nation.

At the Global Trade Review - UK Trade & Export Finance Conference 2016, held in the middle of June and attended by Corrotherm CEO Jan Ward, talks expressed optimism for UK manufacturing. It highlighted issues in productivity, however, with the current uncertain times meaning that there is a general reluctance to invest in new methods. The Brexit vote will add to this uncertainty and it will likely take longer to implement the ‘Industry 4.0’ solutions that are needed, but as markets stabilise again, this will pick up and re-energise the industry.

The Chinese slowdown was also a hot topic, as it has resulted in a reshoring of manufacturing back into the UK. Due to Chinese government policy restricting imports by controlling the currency exchange, it is unlikely that this situation will be changing any time soon. This will help the UK manufacturing base to develop and lead to the need for fewer imports in the long term, which could be a much-needed boost in an independent Great Britain.

Any business working in this industry is likely to feel worried about the referendum result and current trading conditions. However, as of the time of writing, the FTSE 100 was back to pre-Brexit levels and the economy was starting to recover from the initial shock in the days after the vote.

The falling value of the pound is good news for exporters, if only in the short term. For the time being, we are still within the EU and there are no immediate barriers to trade with EU customers. This means that there is a window of opportunity right now, giving UK exporters a price advantage. This is also true when dealing with US markets, as the Pound has fallen against the Dollar. This situation will be temporary, though, and the referendum could leave European customers uncertain, leading to a drop in activity.

This is why it’s so important to build opportunities in non-European markets, something that we excel in. Corrotherm has offices all around the globe, with a strong overseas customer base. We always keep our ear to the ground about emerging markets to stay on top of the industry, which won’t change with the end of the EU membership.

If you want to get in touch about a project or to explore our product line, you can find all of our UK and global contacts here.