The volatile cost of materials, commodity supply risks and the UK's high dependency on imports are threatening UK growth and are an increasingly serious concern in the manufacturing sector, according to a new report from the manufacturers' organisation, the EEF.
The report, “Materials for manufacturing – safeguarding supply”, says that the global growth in middle-class consumers, increased demand for all commodities and an over-reliance on China for strategic supplies, such as silicon metals, rare earth elements and coking coal, is leaving the UK vulnerable.
The EEF cautions that the era in which global economic growth was based on cheap resources has come to an end. About 40% of UK manufacturers’ operating costs are material costs and volatility in commodity prices has been higher in the past decade than at any other time in the previous100 years, says the manufacturers' organisation.
The EEF lists 20 key materials that may be more difficult to source in future, including those used in electronics and telecommunication products, engineering/construction, agriculture, aerospace and steel and aluminium production. It says that, while other manufacturing nations such as Germany, South Korea, the US, China and Japan have already implemented sophisticated resource strategies to shield their economy from resource risks, the UK has so far responded weakly and is in danger of being left behind.
“[The UK] cannot afford to be left underprepared and overexposed. Manufacturers have sounded the alarm over the growing risks to material supply and others are now picking up the clarion call. But, while competitor nations are already taking evasive action, our government is in danger of burying its head in the sand," said Susanne Baker, senior policy adviser at the EEF.
The report has been published ahead of the EEF’s annual conference, which will be calling on the government to establish an office of resource management (ORM) to regularly assess material supply risks and vulnerabilities, and provide stronger incentives tor resource efficiency to help overcome market failures and supply risks. “Given how crucial material supplies are to the UK’s wealth and economic stability, there is clear case for a new ORM to act as a central hub of expertise, data and stakeholder liaison and to co-ordinate the UK’s response to these risks,” said Baker.
Last month, IEMA launched its published a guide, "From waste to resources", on implementing sustainable resource management in an organisation. It also makes the case for integrated action to manage resource security risks and create a more circular economy. IEMA is also a member of the materials security working group, which is also keen to see the government establish an ORM.
