According to Exact’s annual SME Barometer Research, small and medium-sized UK manufacturing businesses are finding it increasingly difficult to design new products for their customers.

Exact cite innovation as a key challenge for the industry as a whole in the UK. So it’s not surprising that SME manufacturers are finding it difficult to keep pace. The past year has seen strong a growth rate and all companies are under pressure to stay ahead.

The 2015 Barometer revealed that UK manufacturers did not prioritise design of new products (27%) over reducing costs (55%) or finding new customers (43%). This compares poorly to other countries in the EU and the USA, which came in 14% higher at 41%.

More positive news the report highlighted is that customers across the EU are less concerned about late deliveries. Previously 27% of companies said they would terminate a partnership if a delivery was late, this has reduced to 24%.

Despite this 77% of UK manufacturers still consider improving customer satisfaction a key business challenge. An increase of 13% from 2015.

Gavin Fell, general manager of Exact Cloud Solutions UK, explained that while “last year’s study painted quite a bleak picture for UK manufacturers. The determination of businesses to innovate combined with the loyalty of UK customers has helped the sector to bounce back” and that “technology adoption can lessen the burden of many repetitive, time-consuming but necessary tasks, leaving space for manufacturers to think outside of the box. It’s great to see that manufacturers have experienced an influx of talent in the last year, which we expect will support this innovative mindset.”

The biggest shift, however, was in the narrowing of the skills gap. Last year 45% of businesses pointed to recruiting talent was the biggest hurdle to business success, this year that dropped to 23%.

Optimistically this could be due to the recent changes in manufacturing education policy, which aims to enable more students to easily pursue STEM subjects. However, this could also be due to supply chain and costs worries as Brexit now looms on the horizon.