EEF and Natwest Bank study shows increasing concern over competition in manufacturing

Research from EEF and Natwest Bank suggests firms are concentrating less on innovation and more on satisfying existing customers

Andy Tuscher, EEF director for the North East region
Andy Tuscher, EEF director for the North East region

UK manufacturers are reaping the rewards of high levels of innovation over the past few years, but now report growing concerns about falling behind competitors, according to a major study published today by EEF, the manufacturers’ organisation, and NatWest Bank.

Activity to develop products and services for new customers and markets has seen manufacturing growth pick up.

But, the 2014 EEF/NatWest Innovation Monitor shows that the strong demand has put pressure on manufacturers’ internal resources, from management time to working capital. As a result, while manufacturers continue to prioritise innovation, they are now focussing on a smaller number of innovative activities aimed at satisfying existing customers.

This has led to an increase in the proportion of manufacturers who are concerned that their level of expenditure on innovation is not enough to keep pace with competitors – up from 19% in 2013 to 26% this year. According to the EEF, this has worrying implications for the UK economy’s long-term competitiveness.

Andy Tuscher, EEF director for the North East region, said: “Innovation is a critical part of manufacturers’ growth strategies and most have the ambition to do more. However, while they are now reaping the rewards of previous activity, and stronger demand is boosting growth prospects, the resultant increase in activity is forcing manufacturers to re-focus their innovation activity and leading them to fear for their competitive position. If the UK is to continue to compete internationally, both the level and effectiveness of innovation must be increased.”

On a more positive note, the EEF’s latest SME Trends Survey shows small and medium-sized manufacturers experienced a strong quarter of orders and output growth in the three months to July.


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