Marginal gains for UK productivity – but manufacturing is falling further behind

Posted on 8 Jan 2020 by The Manufacturer

We’re working longer but producing less than the rest of the economy - what’s going wrong, asks Martin Hurworth, business leader and former managing director of Harvey Water Softeners.

Today (8 January), we got a taste of how much work there is still to do to improve the fortunes of our manufacturing industry, thanks to the latest ONS figures on UK productivity.

The data showed a 0.1% rise in total productivity overall between July and September 2019, following four successive quarters of negative growth since 2018.

Men during precision work on production line - image courtesy of Depositphotos.

To put that into context, the long-term average for productivity across the whole economy has been 2% growth per year.

This latest rise will no doubt be claimed as a sign, however small, of ‘green shoots’ after last month’s decisive election result. However, the outlook for manufacturing alone remains grim, with productivity falling 1.9% in the third quarter of 2019 compared to the year before.

This is despite the fact that the number of ‘hours worked’ grew by 0.9% over the same period – resulting in a 0.4% fall in manufacturing output per hour, compared to a 0.9% rise for services. The figures also showed labour costs rising by 3.6% overall.

As an industry, we’re working longer yet producing less, while wages continue to rise. Something, somewhere is going amiss.

This productivity crisis – and it is a crisis – is the well-known legacy of the 2008 financial crisis, with productivity growth flatlining ever since.

The figires show the scale of the challenge we face as a country to rediscover our competitive edge as we embark on new trade deals post-Brexit. With a new government in place, you could say we need ‘Bojo’ to help us find our mojo!

CROP - Technician at work Production Line - Image courtesy of Depositphotos.

At the recent Manufacturing Technology Conference in Coventry it was made clear that while the desire for quick results is there, real improvements in productivity will only come when we address the long-term issues of skills shortages, uptake of digitalisation and, ultimately, our ambition.

All the while, staying realistic about what is possible, and when.

In my experience, at the SME level, ambition and fear are two sides of the same coin. Organisations need to build teams with psychological safety where fear is minimised and where they can challenge, innovate and fail. This environment can be difficult to get right.

If fear is holding back productivity, then the solution is change. Real change, from the factory floor to the boardroom, where we overcome our inbuilt resistance to innovation, create environments where new ideas can flourish, and defeat our collective national ‘imposter syndrome’.

Government has to play its part and make good on its election promises. Its so-called ‘infrastructure revolution’ needs to be more than just blank cheques or empty promises – it has to support and enable genuine innovation in productivity for the manufacturers that will make it happen,

In the meantime, the solution lies in all of us recognising and celebrating examples of highly productive teams where we find them, giving them the tools and space to thrive, and to share the secrets of their success.  And quick.

*Images courtesy of Depositphotos