No shocks but staunch consistency

Posted on 5 Mar 2014 by The Manufacturer

EEF’s National Manufacturing Conference closed with insight into export challenges and a ministerial speech characterised by undeviating consistency on key industrial policy tenets.

After a morning session which addressed the potential of reshoring to support economic rebalancing and growth EEF’s 2014 National Manufacturing Conference turned to address the opportunities to grow manufacturing contribution t the economy through exports.

A diverse panel of industry leaders addressed the topic.

The panel included representation from prosthetic limb manufacturer Blatchford & Sons, specialist cosmetics SME Pai Skincare and defence giant BAE Systems as well as UKTI and Royal Bank of Scotland’s transaction services arm.

Key outcomes from this panel session, which included questions and answers with an audience of almost 700 manufacturers and industry supporters, centred on what BAE’s Peter Anstiss called relatively “low emotional resilience” among British engineers and engineering sales people working abroad.

Mr Anstiss’ comments were based on recent research from Hay Group and confirmed what he had experienced in witnessing some fairly “fundamental” cultural misunderstandings and mismanagements when trying to conduct business in certain key foreign markets. He spoke mostly about the Middle East.

Sarah Brown, CEO of Pai Skincare agreed that small nuances in culture and behaviour can make or break business prospects in a market and said that Pai, which relies on exports for around 50% of its sales, had only succeeded in markets where it had not tried to skip steps in relationship building.

Honing in on SME challenges abroad Ms Brown added that the costs of protecting IP and brand copyright in certain markets was a heavy burden. She explained how China was currently a “closed market” to Pai because of its flawed IP and brand protection system.

Pai did try to enter the Chinese market relatively recently but found that within an hour of trying to register the brand, a Chinese entity also filed an application to register the same brand.

“Because they were Chinese they were prioritised,” Ms Brown shared with a shocked audience. “Then they tried to sell the brand rights back to us.”

As Ms Brown pointed out, the costs of employing a lawyer to pursue the case for them are simply too high for the £1.3m company employing 11 people in London.

Ministerial presence

EEF now has a strong track record for attracting senior ministerial presence at its annual conference.

Past speakers have included the shadow chancellor Ed Balls and shadow business minister Chuka Umunna.

This year the current business minister Vince Cable returned to the conference and helped draw the day to a close with a strong but staid speech which emphasized consistency of purpose above all.

Some feedback from delegates criticised the minister for saying the “same old thing” but as Juergen Maier, MD of Siemens Industry UK commented afterwards “Isn’t consistency what we have been asking for?”

Dr Cable reviewed the tenets of the Industrial Strategy he launched in 2012 – an achievement he said he was very proud to have been a part of.

The strategy focusses on five key pillars to improving industrial competitiveness including skills, sectors, technologies, access to finance and reform of government procurement practices.

Evidence in Cable’s speech of progress in addressing these elements was strongest with regards to sectors and skills where the business minister pointed to a range of formal and less formal sector strategies which he says are bring renewed confidence to aerospace, automotive and chemicals supply chains among others.

On skills, Cable acknowledged that immediate gaps are still a problem but seemed confident that the rehabilitation of vocational education in the UK is well underway. He particularly pointed to increase in apprenticeship numbers.

Cable admitted the need for more work and policy development to encourage lending to SMEs.

“Net lending to SMEs is declining,” he acknowledged, while mortgage lending is increasing risking the creation of a new lending bubble.

Energy costs were the second major area that the business minister promised to work hard to address in the year ahead.

He said that government understands “the message that we shouldn’t be dealing with the problem of climate change at your expense”.

He went on to summarise a few ways in which he hoped government would be able to prevent the costs of “sensible policies” falling on manufacturers who cannot support them. He spoke of plans revisit Contracts for Difference and exemption packages for energy intensive users contribution to the establishment of the Green Economy.

Little detail was included however as the Chancellor’s Budget announcement looms on March 19.

In response to a question on the likely longevitiy of the current industrial strategy in the event of a change of government at the next election Mr Cable said: “I think there is a high level of consensus about industrial strategy across parties.”

He added: “One of my objectives has been to create an industrial strategy that will survive a change of government. Otherwise, what is the point?”

Cable’s presentation was followed by a characteristically off the cuff speech from Ken Clarke, minister without portfolio.

Mr Clarke consolidated Cable’s messages about the commitment of the current government to work with business to achieve growth.

He focussed on the importance of trade, urging industry to exploit and extract value from ministerial visits abroad, he also updated delegates on progress towards signing a new transatlantic trade agreement with the USA – the TTIP.

He closed with a firm statement that a treaty of this kind, with great potential benefits for business, could not be negotiated by Britain from a position outside the EU.

The EEF National Manufacturing Conference 2014 was followed by EEF’s Annual Member Dinner. Speakers at this event included EEF chairman Martin Temple, shadow business secretary Chuka Umunna and political columnist Matthew Parris.

The hot topic of the evening was energy costs withMartin Temple delivering an impassioned but clearly argued case for commercial energy market reform and the review of green taxes in the UK.