There was a palpable sense of positivity throughout the EEF National Manufacturing Conference 2018 (20 February), but many questions are still left unanswered. Jonny Williamson reports.
This year’s EEF National Manufacturing Conference had a general theme of ‘Global Britain: Change, Opportunity, Growth’, and we’ve certainly seen our fair share of all three over the past 12 months.
We’ve seen the arrival of the Apprenticeship Levy, the Made Smarter (Digitalisation) Report, a long-overdue Industrial Strategy White Paper, fluctuating trade tariffs, and the treasury backtracking on business rate rises.
Numerous high-profile OEMs have announced significant investments in the UK and its resident supply chain of late, including Boeing breaking ground on its first European production facility, Liberty House Group safeguarding thousands of jobs, and Aston Martin taking ownership of its second UK assembly plant, to name but a few.
The capabilities of automation, robotics and digital technology have all increased, while access to finance has become easier and more diverse. The ‘Made in Britain’ marque continues to enjoy a reputation for precision, integrity and quality, and greater numbers of manufacturers are placing collaboration and innovation at the heart of their future strategies.
State of the manufacturing nation
In short, manufacturers face an unprecedent opportunity for growth thanks to expanding globalisation, the emergence of the middle class (particularly in high-growth markets like China and India), and concerted efforts to get more businesses exporting.
Yet, businesses operate in a very challenging political environment, with the complications surrounding the UK’s withdrawal from the European Union only now becoming apparent.
In his opening address to more than 800 leaders from industry, politics, academia and the media, EEF CEO Stephen Phipson stated the top three concerns of UK manufacturers, namely: skills, preparation ahead of exiting the EU, and government empowering businesses to grow and move forward.
Despite a host of “Brexit-induced risk”, Phipson noted that manufacturing has consistently shown a capacity to adapt, change and strive for optimism.
The sector is currently a “bright spot” in what is otherwise a bleak current, medium and long-term picture for the UK economy overall, according to The Financial Times economist, Martin Wolf.
Manufacturing achieved 1.3% growth last year, the highest since 2014, with output currently at the highest level in 10 years. That isn’t surprising, Wolf noted, as there has been a strong global recovery for both established and developing economies since the “three big financial shocks” of recent years.
Brexit headwinds
The most likely outcome of the Brexit negotiations, Wolf predicted, would see the UK adopting a similar trade deal to Canada – being able to trade with the rest of the world in exchange for a more bureaucratic trade process with Europe.
Trade halves as distance doubles, Wolf added, explaining that the “gravity effect of geography” meant that trade with the UK is more important to the EU than trade with US, and much more important than China.
However, the most important goal for the UK must be rectifying its decade-long productivity stagnation, he warned. “This type of productivity growth [near zero] is unprecedented for the UK,” Wolf declared.
Government support
The first of the day’s headline keynotes was Liam Fox MP, Secretary for State for International Trade. Considering the country’s reenergised focus on exports combined with uncertainty around Brexit, to say that delegates were keen to hear government’s future strategy would be an understatement.
Fox did an admirable job talking up the importance of manufacturing, the digitalisation of industry and the Industrial Strategy’s Five Foundations of Productivity; however, he was a little thin on the specifics.
He said that in an effort to improve Britain’s trade relations with key partners such as the US, Australia and China, the government had established “working groups” and “high-level dialogues” – though one would hope that this level of engagement already existed.
Encouragingly, Fox said that the government does not and will not seek to erect barriers to trade where none already exist.
He added that the government is committed to opening the doors to trade for companies at all levels of manufacturing, through accessible export finance, ongoing support and new commissioners in place in rapidly developing nations keen to buy UK-made products.
Unfortunately, Fox didn’t stay for the scheduled Q&A session – something several of the manufacturers I spoke to described as “disappointing” or “frustrating”.
Diversity & inclusivity
Women now comprise more than 40% of GPs and around 50% of all solicitors, but only 8% of professional engineers. That figure has “remained static under this government”, according to Jeremy Corbyn MP, Leader of the Opposition, and desperately needs to be addressed, not just as a matter of “social justice”, but as an “economic imperative”.
“We cannot build a more prosperous economy without making the use of the talents of everyone,” he noted.
“Businesses are crying out for infrastructure investment,” Corbyn continued, “Which is why Labour has pledged to create a National Transformation Fund to upgrade Britain’s transport, energy and digital infrastructure.”
Furthermore, Labour’s National Education Service aims to provide free, lifelong learning to all, so that anyone can retrain or upskill at any point in their life. That could prove to be critical for the country in the wake of rising automation, digital disruption and technological change.
Corbyn also took aim at the financial services sector – particularly the City of London. Finance may be the “grease that oils the wheels of our economy,” but he pledged to take “decisive action” to make finance the “servant of industry, not the masters of all”.
Prior to speaking, I would have said that Corbyn was hardly likely to appeal to the capitalist business leaders present, but he really seemed to understand the importance of manufacturing and the need to make it appeal to women and in particular, the next generation.
His Q&A session was handled with aplomb (clearly his much-needed media training last year continues to pay dividends), and judging from the ensuing conversations I had during the networking drinks, one suspects that he left with more ‘friends’ than he arrived with.
A little luck goes a long way…
The day’s proceedings came to a close with a fireside chat with Richard Reed CBE, co-founder and former co-CEO of Innocent Drinks.
Reed was open about how the Innocent ‘brand’ may have taken all the credit publicly, but it was the manufacturing supply chain beneath that made it all possible.
“Manufacturing is the unsung hero of our country which few people outside industry or have no direct contact recognises… The public needs to better understand that we are very good at manufacturing and making things in this country,” he said.
“Manufacturing is incredibly difficult, but all too often it is taken for granted. It’s just expected that a product will be on a shelf and little thought is given to what is involved in putting it there. However, when something goes wrong, all the blame is put on the manufacturer.”
Reed spoke openly about how much luck he’d had in his success to date, commenting that the success of Innocent was down to three factors: working hard, having knowledgeable people in place to make the right decisions, and a colossal amount of luck.
Having secured their first supermarket trial order – which Reed described as being either the “beginning of the beginning, or the beginning of the end”, his team went out and bought their own products to ensure they sold.
It was a fitting end to the conference, with Reed eloquently reinforcing and typifying the most common phrases said by many of the speakers: innovation and creativity, employee engagement, and supply chain collaboration.
Successfully harnessing all three will stand UK manufacturers in good stead to adapt to ‘Change’, embrace ‘Opportunity’ and push for ‘Growth’.