The annual report examines various metrics, including exports, R&D investment, and salary levels within the sector.
However, in more positive news for the UK sector, the analysis shows that last year, manufacturers contributed £217 billion to the economy and supported 2.6 million jobs. Investment in the sector has also increased, with £38.8 billion invested compared to the previous year.
Globally, China remains the largest manufacturing nation, producing output worth $5.06 trillion – almost a third of global production. The US follows with $2.69 trillion, and Japan holds the third spot with $850 billion. Germany, the leading manufacturing nation in Europe, has a manufacturing output of $751 billion, placing it fourth worldwide.
Make UK highlights that this shift underscores the need for the UK to adopt a long-term industrial strategy, as countries with such strategies are clearly benefiting from enhanced economic output.
Verity Davidge, Director of Policy at Make UK, commented: “It’s deeply disappointing to see the UK fall out of the top 10 manufacturing nations for the first time.
“However, this drop reflects specific factors and trends reshaping the global economy rather than a decline in UK industry itself.
“These trends reinforce the necessity for the UK to implement a long-term industrial strategy to leverage our undeniable strengths.”
The US remains the top export market for UK goods, valued at £61.8 billion, up from £56.7 billion last year.
However, Make UK’s report indicates that six of the top 10 export markets are in the EU, with Germany being the second-largest market (£33 billion), followed by the Netherlands (£31 billion) and Ireland (£28.2 billion). This, the organisation says, demonstrates the ongoing importance of trade with the EU and the need for the new Government to address trade barriers with its largest export market.
Regionally, the north-west of England leads in manufacturing output at £29.5 billion, followed closely by the south-east at £26.1 billion.
By sector, food and beverage is the largest contributor to manufacturing gross value added (21 percent), followed by the transport sector, which includes aerospace and automotive, at 15 percent.
The analysis additionally challenges the perception that manufacturing jobs are poorly paid. Average salaries in the sector increased by £2,281 to £38,769, which is 10 percent higher than the average salary in the wider economy (£35,404).
“The UK has huge potential to regain its position as a manufacturing superpower, if it harnesses the transformative power of the energy transition,” commented Kelly Becker, President of UK and Ireland, Belgium and Netherlands at Schneider Electric.
“This needs to be a key part of the forthcoming industrial strategy, which should assess and support the manufacturing and uptake of solutions that contribute to the decarbonisation and digital transformation of the UK economy and infrastructure.
“Many of these manufacturers are creating new, highly skilled jobs across the country and will help to supercharge local economies and maximise the UK’s competitive advantage globally, by developing local expertise and creating new trade and investment opportunities.
“Long-term investment in the manufacturing industry, such as maintaining and expanding full expensing, will be critical to driving growth and prosperity, help the UK reach net zero, and set the standard for climate and sustainability standards globally.”