A new report from Santander UK and EEF (the manufacturers’ organisation) (www.eef.org.uk) on the UK’s mechanical-equipment industry concludes that growth will come from intelligent manufacturing, ‘4IR’ technologies (fourth industrial revolution) and renewable-energy demand.

It also says that other short-term opportunities include upscaling the ‘after sales and service’ market, fulfilling demand from the global construction equipment industry, and new funding models such as leasing, adding that export opportunities are key for the sector, with over half the industry’s demand generated overseas.

The report says: “Manufacturing as a sector enjoyed an excellent year in 2017, expanding at its fastest pace since 2014.

“Encouragingly, the healthy performance was broad-based across the sub-sectors; but while the industry continues to thrive, the strong global economy is also bringing investment back on-line and pushing the UK’s mechanical equipment manufacturers to keep up with the digitalisation and modernisation of the supply chain.

“Intelligent manufacturing, the rise of automation and other 4IR technologies, plus increasing demand for renewable-energy equipment, are central to the future growth and success of the UK’s mechanical-equipment industry.

"In an industry worth £11 billion to the UK economy in terms of Gross Value Added (GVA), growing sector exports internationally is also vital to secure long-term success.”

The report also says that while automation, digitalisation and the renewables sector are longer-term global trends, there are a number of short-term opportunities, including: the after-sales market (the nature of mechanical-equipment products means they tend to have longer lifespans than products in other branches of manufacturing); the global construction equipment industry (this is set to grow to $180.7 billion by 2021 and represents a major opportunity for construction equipment manufacturers in the UK); and new financial models that see big companies offering finance plans to increase their sales and revenues.

In 2017, the UK’s mechanical-equipment sector generated £33 billion from exports, and the sector has seen foreign demand for its goods increase by almost a half since 2000, although other countries have expanded their mechanical-equipment industries at the expense of the UK.

EEF economist Martyn Jenkins said: “The success of the sector in continuing to develop its production processes in the digital age, as well as seek out new markets abroad, stands it in good stead for the future.

“That said, policy makers must continue to support this vital sector by ensuring that the UK business environment is cost-competitive, trade links are retained, and the longstanding productivity issue is addressed.”