Mark Elborne discusses the outlook for UK manufacturing with TM following the recent publication of his company’s six-monthly barometer of high-tech manufacturing.
TM: The most recent GE High Tech Manufacturing Index showed that less than half of companies in this group are looking to counter uncertainty in the eurozone with more exports to rapid growth economies. Is this disappointing given the emphasis government has put on export led growth?
I wouldn’t say it is disappointing. The number of companies looking to increase exports is much higher than it has been in the past – but of course one would always like there to be more companies with the confidence to pursue global opportunities.
There are widely varying degrees of difficulty in driving a new export market and it is easier, perhaps, for larger companies to take advantage of these. Overall though we are starting to turn around that position whereby the UK exports more to Ireland and the eurozone than it does to the rest of the world.
TM: The Government staged 18 business summits at Lancaster House during the Olympics to promote exports and foreign investment in the UK. How important were these events?
I attended two of these summits myself. They are important as they show the Government’s commitment to support industry as the engine of recovery – even if that engine is not running terribly fast at the moment. When you showcase the reasons for investing in the UK as opposed to anywhere else, the macro considerations are pretty compelling. The rate of corporation tax, the ease of doing business, employment law and regulation all make the UK an attractive place to invest. Leveraging the Olympics as a stage to show this off to global investors is very positive.
TM: Do you think the ongoing eurozone crisis is changing the way in which foreign investors view the UK as a manufacturing location?
There is a danger that the general sentiment and worry over the eurozone will make Europe as a whole look like an unattractive place to do business. The uncertainty in the eurozone is impacting the UK economy and if there is no demand then the economy will remain flat regardless of what the Government does. The fact that Britain is not actually in the eurozone sometimes gets glossed over. This position is important as it allows access to certain levers in monetary policy that those in the eurozone can’t take advantage of.
However, on the whole, the advantages of investing in the UK as opposed to anywhere else in Europe are driven by factors that have little to do with the economy directly. The UK has been, by an exponential factor, the largest investment location for GE in Europe over the last ten years. This is primarily due to the technologies that we have wanted to add to our product portfolio across sectors.
TM: The GE High Tech Manufacturing Index highlighted that many companies are still finding access to finance difficult and that this is stifling investment. How well do you think government is addressing this challenge?
It is essential that government steps in to ease access to finance. There have been a number of recent announcements to show that they are doing this. The Regional Growth Fund is a good initiative in terms of maximising the investments that can be made. GE received an RGF grant that will leverage our investment of around £13 million with £1.7 million of government money.
Not enough SMEs are accessing this resource. Though admittedly there are challenges for them in that there is a £1 million minimum application and the process takes time and rigorous due diligence. GE used external consultants to help it through its funding applications. The best way for SMEs to access RGF is through the LEPs.