2024: Our Predictions for the Manufacturing & Engineering Sector
As we usher into the new year, the industrial landscape is set for groundbreaking changes. Jonathan Burke, Head of our Manufacturing & Engineering practice, discusses his thoughts on the trends, challenges and opportunities he predicts will sculpt the trajectory of his sector in 2024.
Across the UK’s industrial manufacturing sectors, we will start to see the benefits of rising confidence levels in the sector. Businesses will continue to invest in digitisation, and we will start to see the impacts of generative AI in boosting workplace productivity. The market will require significant investment in training or retraining talent as this transition occurs, and these challenges will become more acute at the senior level where leaders who can impact this agenda are scarce and highly coveted. Sustainability, and Diversity & Inclusion, will continue to be a key strategic focus for manufacturers as the year progresses. Lowering interest rates and energy costs will be welcomed by UK manufacturers, as will a general election later in the year that may provide some welcome certainty.
Key themes that we have seen play out in recent years will remain prominent, include the pace of succession management bringing the next generation of leaders to the helm in our manufacturing sector. We have seen, and been part of, a wave of new ambitious and entrepreneurial talent taking significant steps in their career, bringing with them a revived energy and focus to the organisations they are now leading. Interestingly, and very positively, we have seen a broader mix of international talent coming through, and this is potentially the start of a great drive in the diversity across our manufacturing leadership teams.
Within the Renewables and Cleantech markets, 2024 will be an exciting year. We will see further investment and progress made in the UK’s Hydrogen production capability. Market dynamics are changing, and we are seeing more and more innovative and exciting technologies being developed, aiding the energy sector’s transition to decarbonisation. Momentum behind Sustainable Aviation Fuel projects continues to build which will make this an interesting market to follow over 2024 and beyond.
The Automotive sector continues to be robust, although UK Government policy changes have created some uncertainty in the market, and issues within global supply chains, whilst easing, continue to challenge the sector. Much of the heavy lifting has been done in terms of near shoring supply chains and reducing the reliance on Chinese component suppliers. With interest rates lowering and optimism that the cost of living crisis will begin to ease, we should see more activity within this sector in 2024.
In the Aerospace & Defence sector 2023 saw the broader industry experience a significant revival in demand for product. In civil aerospace this was driven by a surge in passenger activity, which surpassed pre-pandemic levels in most markets. Defence saw activity increase across all major domains, as geopolitical conflict continued to escalate, as did national defence budgets. The conflicts in the Ukraine and Middle East, allied to a wider demand for advanced technologies being developed, mean 2024 will be another active year where facts paced technological development will occur and demand staying high. Commercial aviation will again continue to see high levels of passenger miles and therefore ongoing need for products. The buoyant market will bring with it challenges, namely complex supply chain issues, increased lead times, and a sector wide talent shortage as competition continues to increase.
For the Speciality Chemicals and Process Industries markets, 2024 could be a very mixed year depending on the end markets being served. Declining consumer confidence, supply chain de-stocking, and a pause in capital investment caused by higher interest rates, could translate into a period of slow growth for many companies, whilst the after-effects of Brexit are also still lingering for many. As interest rates begin to come down, and consumer confidence returns, the second half of the year may see a welcome rally in growth output.
If you wish to further discuss any of the topics covered in this article or have a conversation about increasing the leadership capability within your industrial business then please contact Jonathan Burke.