- The Index is split into three processes - Machining, Fabrication, and Others.
- 2022’s data for Quarter 2 is collected from 228 companies and 376 projects.
- Quarter 2's Contract Manufacturing Index grew by 13% in comparison to the first quarter, and by 38% in comparison to the corresponding quarter of 2021.
- The Fabrication Index performed exceptionally well from April to June, achieving a 61% increase. Meanwhile, the Machining Index and Others Index declined by 10% and 8% respectively.
- The average number of quotes received per project fell once again from 2.3 to 2.2.
Overall, the second quarter of 2022 has proven positive for the UK subcontract manufacturing industry, with the Contract Manufacturing Index reporting a 13% rise in value in comparison to quarter 1. The latest Index also revealed growth of 38% against the second quarter of 2021, proving that the industry is putting the days of the pandemic behind it and ramping up its activity.
The main contributor towards quarter 2's growth was the Fabrication Index, which increased by a massive 61% from April to June. This followed a dramatic 35% drop during quarter 1, showing that the industry has more than regained the traction it lost within this period. Meanwhile, the Machining Index - which performed well during quarter 1 with a 14% rise - and the Others Index did not experience the same upturn, instead falling by 10% and 8% respectively during the second quarter.
Nonetheless, the positive attributes of the second quarter's Contract Manufacturing Index did not end with the trajectory of the Fabrication Index. The average value per project, as well as the percentage of projects being awarded, has also undergone an upturn, showing that the work is there for the taking by subcontract suppliers.
However, we predict that this will level off moving forward, as the current disruptions to the supply chain due to the materials shortage have resulted in delays to projects that are currently in the pipeline. This is an ongoing issue currently facing the industry and one that is likely to continue for some time.
Following comparably high levels of activity in March, the Machining Index experienced a much slower period as it moved into April. The 10% decline of this Index across the second quarter overall can be largely attributed to its slow start; however, activity levels did undergo a month-on-month rise across the remainder of the quarter.
After growing by 14% from January to March, this downturn is - at first glance - a disappointing result, but the trajectory of the Machining Index across the second quarter shows promising signs of growth as we head into the third quarter of the year. Nonetheless, it remains to be seen whether subcontract spending in this area retains its emerging upwards trend.
- 55% of the second quarter's projects were for machining processes.
- The buyers who gave us these projects have a total outsourcing value of £14,265,425, compared to a value of £15,858,433 in quarter 1 2022.
- The latest results show that the Machining Index has fallen by 10% from quarter 1 into quarter 2, and by 2% against the comparable quarter of 2021.
After a modest start to 2022, the Fabrication Index underwent a period of heightened activity within the second quarter of the year. Although activity levels tailed off slightly at the start of the quarter, they ascended throughout the remainder of this period - June saw the highest levels of activity of 2022 to date, which bodes well for the trajectory of this Index moving forward.
With this heightened level of outsourcing activity, it's no surprise that the Fabrication Index grew by 42% from April to June. Furthermore, the level of growth over the previous twelve months reached an astounding 61%.
It's interesting to note that the results reported by the Fabrication Index and the Machining Index have inverted from Quarter 1 into Quarter 2. Whilst the Machining Index was the sole reporter of growth from January to March, this title has now fallen to the Fabrication Index, whilst activity within the machining market has since declined.
- 38% of the second quarter’s projects were for fabrication processes.
- The buyers who gave us these projects have a total outsourcing value of £24,900,665, compared to £17,486,633 during Quarter 1 2022.
- The Fabrication Index has excelled during the second quarter, growing by 42% from April to June. This is compounded by an excellent contrast to the second quarter of 2021, with respective growth of 61% over twelve months.
Representing processes such as casting, toolmaking, finishing, plastics & rubber, the ‘Others’ category makes up 7% of the projects generated within the second quarter and is therefore more difficult to monitor. With that being said, quarter 2's results are a mixed bag for the Others Index - whilst it did report a fall of 8% in relation to the first quarter of the year, this Index actually grew by a sizeable 49% in relation to the second quarter of 2021.
Whilst the Fabrication and Machining Indexes started the second quarter with a downturn in activity, followed by a steady ascent across May and June, the Others Index bucked this trend. April proved to be one of the strongest months of the year for this particular Index, whilst it declined dramatically going into May and further still in June.
- 7% of the second quarter’s projects were for processes that fall under the ‘Others’ category.
- The buyers who gave us these projects have a total outsourcing value of £4,287,877, compared to a value of £4,624,540 in quarter 1, 2022.
- The Others Index fell by 8% during the second quarter; however, in comparison to the corresponding quarter of 2021, this Index grew by 49%.
- The Others Index bucked the trend exhibited by the Fabrication and Machining Indexes, which both experienced a downturn in April followed by gradual recuperation across the remainder of the quarter. By contrast, the Others Index experienced a strong start to the quarter, but with a dramatic decline in activity as the quarter drew to a close.
- The Industrial Machinery sector prevailed as the forerunner for the fourth quarter in a row, accounting for 28% of subcontract spending from April to June.
- In second place, the Food & Beverage industry made its first appearance since the third quarter of 2020, with 17% of the total spend throughout this period.
- Smaller industries that cumulatively form the 'Others' category accounted for 16% of quarter 2's outsourcing efforts, placing third overall.
Presiding over the top industries since the third quarter of 2021, the Industrial Machinery sector once again served as the most dominant purchaser of subcontract engineering services during the second quarter. Accounting for 28% of all activity during this period, this industry overshadowed the efforts of all other sectors by 11%. Meanwhile, the Food & Beverage sector experienced a huge surge in subcontract spending during the same period, rocketing to second place and accounting for 17% of subcontract activity. This is even more notable given that the sector has been absent from the top industries represented by the data since the third quarter of 2020.
In a somewhat unusual turn of events, third place went to the 'Others' category with a 16% share - a collective of smaller industries that fall outside of Qimtek's specified sectors. Needless to say, this shake-up to the top three industries caused ramifications further down the table. Having placed second during the first quarter, the Electronics industry fell to fourth place, accounting for just 9% of all subcontract purchasing from April to June.
Elsewhere, the Communications Equipment industry ascended from sixth place into fifth, with an 8% share of subcontract spending - a tied result that puts it just slightly ahead of the Automotive sector in sixth place. Meanwhile, the Heavy Vehicles/Construction Equipment industry - as well as the Construction sector - both slowed their subcontract spending efforts during the second quarter, each accounting for 7%. Whilst this decline was more pronounced for the former, having placed fourth during the first quarter of the year, the Construction sector only fell marginally by one position.
Three of quarter 1's top industries disappeared from the running during the second quarter. These were the Furniture industry (previously third), Truck & Transportation (previously fifth) and Pump & Valve (previously eighth).
About the Contract Manufacturing Index
The Contract Manufacturing Index (CMI) has been developed to reflect the total purchasing budget of companies that are looking to outsource manufacturing in any given month.
This reflects a sample of over 4,000 companies, who have a purchasing budget of more than £3bn and a supplier base sample of over 7,000 vendors, with a verified turnover in excess of £25bn.
We measure this by extracting data from the projects we receive from manufacturing purchasers who have an active need for the services of subcontract engineering suppliers.
Since 2016, we have published the index quarterly and this report is a summary of our findings for the second quarter of 2022. In order to shed more light on the emerging trends, we have also broken this down by process and industry.