EEF, the manufacturers’ organisation, has over 6,000 members and claims to be the single most influential force behind UK manufacturing. In 2008 it rebranded and has since expanded its portfolio of services to manufacturers, which includes a new three-part recession survival guide – Manufacturing. Your Future. Will Stirling talks to Gilbert Toppin, the organisation’s chief executive officer.
EEF has a lot on its plate. As the pre-eminent trade organisation specifically for UK manufacturers, it provides a full range of business services and support to its members including HR, legal and taxation advice, health and safety, training and development, environmental consultancy, information and research and more. It also lobbies government on behalf of its members to address these subjects. While manufacturing has suffered badly in the recession, EEF’s workload has increased to help its members get through the worst, prepare for the recovery and interface with government which has acknowledged the need to rebalance the economy, where, says EEF, manufacturing will play a big part.
In October 2008, what had been the Engineering Employer’s Federation dropped the federation status and restructured to ‘One EEF’ in an effort to better meet the needs of its members and the sector. This seems to be working; net membership was up 7% in 2008 and is growing this year. Gilbert Toppin, EEF’s ebullient while sincere chief executive, identifies three key challenges facing manufacturers where EEF is influencing the agenda:
1. Rebalanced economy and industrial activism
Moving the agenda from lost jobs to planning shifts, and an emphasis on the real economy. Greater focus on a regionally distributed economy: are regional government mechanisms fit for purpose? There is evidence that there needs to be improvements in this area.
2. Contagion of the re-regulation of financial services
The threat of regulatory overkill spilling over from financial services into the real economy.
3. De-globalisation of financial services and other business sectors
There has been a trend since the financial crisis to deglobalise financial services and ‘grow your own’, increasing the threat of protectionism. Manufacturing is one of the most intensely globalised operations — UK manufacturing being highly export based is particularly at risk.
UK – safety in numbers
On an equivalent basis industrial output in the UK is down 9% this year. Compared with our European neighbours (mid-teens average) and the US (low 20s), the UK is faring better but a 9% hit is still huge. Its comparative performance shows a sense that, in Toppin’s words, “what doesn’t kill you makes you stronger” — UK manufacturing is resilient, and has been disproportionately affected by the deeply ailing car industry.
Toppin, an American-accented British national with a background as an engineer (Binnie Black & Veatch) and business consultant (independent and Deloitte), puts the UK’s position into context:
“The level of granularity in manufacturing in our economy is different. There are lots of small and medium-sized enterprises which aggregate together in complex supply chains with great results. We have a few big brand names like Rolls-Royce and largely these are systems integrators these days. Historically we’ve compared our bigger players on paper by the number of our ‘national champions’ with the continent.” In fact, Toppin says, those larger monolithic companies mostly get their work done inhouse. They have been hit harder because they have fewer places to go, the pain is not spread through the supply chain.
“The lesson is that we turned out almost by accident to have a more recession-proof industry structure than the international competition, China apart, on first pass, and that our small and medium firms are showing more dexterity, true grit and are buckling down,” he says.
Thrive, but first survive
EEF’s frontline mandate is to help its members, and the sector, in any appropriate way to stay in business and prosper. Access to credit, for example, is a key area where EEF has lobbied government to fast track its loan guarantee schemes and, through the advice of chief economist Steve Radley and his team, loosen the qualifying criteria for some schemes.
The need for support in tough times reveals much about the make-up of the manufacturing demographic. “There’s an explanation here for the relative invisibility of manufacturing compared to Europe, and those industrial structures of the US and Japan. The UK is made up of lots of little pieces, they’re individually small trading states here and there, and its harder to get a picture of what goes on in them.
“Manufacturing has got to lose its introspection about whether manufacturing is important or not important, visible or not visible. The reality is we have what it takes, we have a very strong industry, a high export sector, the sixth biggest manufacturing economy in the world and, come the upturn in fact we are starting in the right place.”
EEF’s message to government therefore is pay attention to the structure of manufacturing and focus on the regional. “There’s a question mark as to whether our governmental system is fit for purpose in its regional administration and there have been a lot of Qs if this needs reform?”
On the third main challenge, the growing trend of deglobalisation and the threats of protectionism that brings, EEF has a positive message. Providing countries and corporations resist the temptation to turn inwards and globalisation is sustained, “if the UK is late out of the recession, which is the general perception of the IMF and others, it follows that everybody else will be out first,” says Toppin. “As other countries recover earlier they will need components and products. Ergo, in such a scenario manufacturing should recover more quickly than some sectors.”
It’s not easy being green – but we can help
On lowering carbon emissions, Toppin says: “Manufacturing is a big part of the problem and part of the solution for creating the right future for the UK and the planet, so we have a great part to play.” EEF has pushed the green agenda for manufacturers in several ways:
1. Encouraging companies to publicise that they are engaged in the issue
Britain, along with Germany, has the most binding commitment to a low carbon future and the most rigorous support. The Department for Energy and Climate Change, says the UK is committed to 80% absolute reduction in greenhouse gases by 2050. “How do you explain that position to your customers, how do you access that support? We’re helping our member in those areas,” says Toppin. “If a supplier says what’s your position on low carbon? the first answer should be, well actually we’re in Britain, so we’re going to be regulated either way on this subject.”
2. Incentive to adapt products to low carbon variants, or to enter this field
Beyond the wind turbines and electric cars there are other ways in which more commonplace manufactured products like variable speed pumps can find a place in the low carbon solution. “We’re helping our members understand that, through networking, groups, connecting, but also building supply chains.”
3. Encouraging more green practices within the factory gates
One pillar of EEF’s ‘Manufacturing. Your Future’ programme is Conserve Your Energy, a programme of activities aimed to help companies cut energy costs and eliminate waste. I reduce emissions, work responsibly. This includes an online service that provides a tariff comparison for energy bills, the ‘Energy Challenge’ which provides pointers to reduce energy consumption and a set of free downloads including ‘Stop Burning Money’, guidance on resource efficiency and the business benefits it brings.
4. Lobbying government for green technologies on behalf on industry
“The second one, sometimes our most valuable contribution, is getting manufacturers’ minds to focus on this idea. Quite often there are green uses for technologies that you would not naturally think of as green technologies,” says Toppin. For example one EEF member makes dewatering equipment for foundations, used to drill microwells for e.g. underground car parks where water is pumped out through manifolds. Exactly the same technology can be used for laying pipes in underground car parks, which heats up in summer. Hot water from there can be pumped underneath the building, to heat the car park in winter. It uses the same technology, with some changes in manifold design, but with a green application.
How does EEF help such companies? “We do it in various ways. We will obviously publicise these case studies where possible. One service is where we go to our members, take them through the green agenda, help explain what we see as the opportunities, and the obstacles and out of that how they foster a technology variant – a brainstorming exercise.”
An example where EEF’s networking helped shape a new product was at a low carbon summit it ran in Newcastle recently. A door manufacturer wanted to put air in doors to improve insulation, but had no expertise in air handling equipment. Toppin helped network him with an air handling specialist at the summit. His reaction was that he’d done a week’s work in an hour. “We can’t publish detailed papers with lists of opportunities, but we create forums, networking, opportunities and raise awareness.”
Manufacturing. Your Future
In 2009 EEF launched ‘Manufacturing. Your Future’, a three-month programme of help and information focusing on finding the optimum workforce for businesses while minimising redundancies (Shape Up), reducing energy costs and carbon emissions (Conserve Your Energy) and a set of services to increase competitiveness (Compete and Win), “to keep a strong eye on the possibilities for resurgent growth when orders recover, which they will,” Toppin adds. While the programme officially ran from just February to May, EEF intends to rerun the programme later this year.
“These seminars are unique and they bring together expertise from across the sector. For example, on the restructuring seminar on resizing your workforce, union representatives attend to advise, with Conserve Your Energy there are energy specialists. The initiative is a nine-point checkplan, so you are able to say ‘OK I’m good on that topic, I’m not good on that topic’, there are things here I haven’t thought of, where you can get some practical help from us.”
As well as research efforts, the web mechanism, face-to-face services such as the seminars, the organisation continues to lobby on through 2009 on the issues raised by Manufacturing. Your Future.
See www.manufacturingyourfuture.co.uk for full details.
Addressing the skills gap
EEF knows that there is a skills shortage in the real economy and is addressing this on several fronts. How? Steve Radley, chief economist, says: “More investment is required to teach STEM subjects (science, technology and maths). Government needs to communicate better in this area, give it better direction so school leavers know where to go. EEF is giving strong signals to all parties this is necessary. There are some positives in knowledge transfer; some of those who have engineering jobs can and have retrained and teach engineering in schools.”
For graduates, the remunerative allure of financial and well-paid non-financial service sectors have been a resource drain on manufacturing. Toppin is keen to point out that there are other advantages of careers in manufacturing, which should get through as the economy rebalances further.
“The skills agenda is an old agenda with a new look. The real economy has new attractions — we are seeing a shift to focus on real values in the real economy. Pay is not that bad, not as good as some of the high end jobs in the City, but it is good. There are lifestyle advantages as we are regionally based, so it doesn’t necessarily mean working in the conurbations. And as industry shifts to more environmentally responsible positions, those jobs that grapple with those challenges actually provide a high level of job satisfaction, so we have [non-financial] attractiveness.
“We are seeing renewed interest, particularly in engineering, and I would encourage manufacturers put their hands up and say long and loud they’ve got great jobs in the real economy. Real jobs, real people doing real wealth creation, and we’re working with government to get that message over to young people.”
On innovation, Toppin is confident this will be an exciting area for manufacturing, as government has expressed its commitment to improve manufacturing, and money has been supplied in the form of the £750m Strategic Innovation Fund. “We need to think how we reinvent capital investment in new technologies and revise manufacturing techniques as well as R&D — we’re working in this area and watch this space.”