The UK’s manufacturing sector has dropped out of the top 10 world rankings for the first time, falling to 12th, according to the latest official figures available published by Make UK today.
The figures are contained in the latest annual ‘Manufacturing – The Facts’ which contains a wide variety of data about the contribution of manufacturing to the economy including exports, sectoral breakdown, how the UK compares to other nations and salary levels.
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The data shows that in 2022 (the latest year for which global comparisons are available) UK manufacturing output was worth $259bn. This is behind Mexico (£316bn) which has climbed to seventh on the back of an already strong manufacturing base but also Chinese investments made in the first Trump Presidency to counter tariffs, while Russia has climbed to eighth place ($287bn) on the back of substantially increased defence production which is now worth 6% of GDP. Both these countries have also leapfrogged Italy ($283bn) and France ($265bn) respectively who have dropped in the world rankings as a result to ninth and tenth respectively.
Taiwan has also edged very slightly ahead of the UK on the back of its global dominance of semiconductor manufacturing where demand has risen substantially in recent years.
China remains the largest manufacturing nation with output worth $5.06tn (almost a third of global production) followed by the United States $2.69tn and Japan $850bn. Germany remains the biggest manufacturing nation in Europe by some distance ($751bn) and retains its position as the world’s fourth largest manufacturing nation, followed by India and South Korea who have swapped places in fifth and sixth respectively.
According to Make UK the data reinforces the need for the UK to adopt a long term industrial strategy as those countries who have such a strategy are clearly seeing the benefits on economic output. A report by Make UK last year found that eight in 10 manufacturers feel they are at a competitive disadvantage compared to other nations with industrial strategies.
Verity Davidge, Director of Policy at Make UK, said: “There is no getting away from the fact it’s deeply disappointing to see the UK drop out of the world’s top ten manufacturing nations for the first time. However, this isn’t a reflection of any decline in UK industry but specific factors and trends which are redrawing the contours of the global economy. These trends reinforce the need for the UK to react with a long term industrial strategy to take competitive advantage of our undoubted strengths. This will ensure the UK retains its place at the top table of advanced manufacturing where it has many world class sectors.”
The analysis of official data also shows that the United States remains the dominant export market for UK goods worth £60.1bn in 2022. Germany is the second highest destination (£33.bn) while The Netherlands is third (£31bn). However, Make UK cautioned that trade with the Netherlands could be inflated artificially by goods being routed through Rotterdam for onward travel to other destinations. Ireland is the fourth largest export market (£28.2bn).
Six of the top ten export markets are in the EU, worth approximately £150bn which is almost three times the exports to the US and around eight times the amount to China (£21.4bn). According to Make UK, this highlights the continued importance of the EU for UK goods and the need for the new Government to smooth out trade barriers with what overwhelmingly remains the UK’s dominant export market.
By sector, the food and drink sector is the biggest contributor to manufacturing Gross Value Added (21%), followed by the Transport sector (largely aerospace and automotive) at 15%.
The North West remains the biggest manufacturing area of the UK, worth £29.5bn in output and employing 330,000 people. The sector accounts for almost 15% of the North West economic output overall and 8% of regional employment. The East Midlands has the highest share of manufacturing as part of its regional output overall with the sector accounting for almost 16% (15.9%) of the East Midlands economy. This compares to just under 10% national average.
The analysis also dispels the continuing myth that manufacturing jobs are badly paid when, in contrast, the average manufacturing salary at £38,769 is 10% higher than for the average of the economy overall at £35,404.
Commenting on the news Dr Graham Hoare OBE, Chief Executive Officer at the Manufacturing Technology Centre (MTC), said: “This is a major body blow to UK manufacturing. We are home to some of the most innovative manufacturers and research facilities in the world. We must do everything possible to harness this expertise to reinvent ourselves as a manufacturing superpower.
“The government’s plans to change UK manufacturing’s fortunes through a new industrial strategy and key investments from the National Wealth Fund can’t come soon enough. But, as part of this, a major upskilling and reskilling programme will be critical. Without the right people with the right skills, we won’t be able to hit productivity targets, even with the latest ideas, technology and funding in place.”
Kelly Becker, President of UK and Ireland, Belgium and Netherlands, Schneider Electric added: “The UK has huge potential to regain its position as a manufacturing superpower, if it harnesses the transformative power of the energy transition. 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.”
James Smith, Co-CEO of A-SAFE Group added: “The UK falling out of the top ten nations for manufacturing isn’t just a statistic; it’s a call to action. Whilst the National Wealth Fund sounds promising, we need more than headlines – we need results. We require a long-term vision backed by substantial investment – in our people, in innovation, and in making manufacturing an attractive career choice. While the Fund is a start, the government must go further with meaningful incentives, and businesses must also step up.
“We need to invest to grow, focusing on quality and niche areas where we can excel. This isn’t just about economic rankings or simply following the pack or clinging to old ways. Our future competitiveness depends on our courage to disrupt and innovate today. This means investing in digital skills, embracing automation, and fostering a culture where we dare to be different.”
Sath Rao, Head of Global Manufacturing Strategy, Zebra Technologies, said: “Make UK has suggested its own explanations about why the UK dropped out of the top ten. It’s possible there are other factors at work too, and it’s important to note that the rankings data is from 2022, so we won’t know for a couple of years what the UK’s ranking is as of today. Earlier in July this year Make UK and BDO analysis said the number of manufacturing jobs in the UK had dropped by 34,000 in the past year, but there are still 64,000 vacancies – representing around £6bn per annum in lost output. Jobs, vacancies, skills and the technologies needed to support manufacturing industries should be looking at in terms of recovery and putting UK manufacturing back in the top ten.”
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