Manufacturers adapting to challenges of low cost competition

The UK’s manufacturers are developing successful strategies to cope with competitors that undercut them on price, the EEF has said.

A survey from the EEF, which represents manufacturing and engineering employers, found that fewer UK firms are suffering as a result of low-cost overseas competition than was the case in 2004.

While many low cost competitors, such as China, have been making efforts to become more innovative, only two fifths of UK manufacturers regarded value added goods from competitors as posing a threat and only 3 per cent saw them as a significant threat, down from half and 12 per cent respectively in 2004.

UK firms have been thriving because they are concentrating on strategies, such as entering niche markets, increasing innovation and improving service delivery, that sidestep direct competition on price, the EEF said.

Steve Radley, the EEF’s chief economist, said: “This survey paints a positive picture of how manufacturing companies have adapted to the challenge of the global environment. Instead of competing on price alone they are adopting a range of strategies to take advantage of emerging markets. While there are many other challenges on the horizon, manufacturers look well-placed to rise to them.”

Date:26 March 2008

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