TM's James Pozzi discusses the week’s big manufacturing issues including the latest PMI data, women in the industry and driverless cars.
The PMI data – cause for concern?
Given its overall strength throughout the first six months of 2014, UK manufacturing looked set for supercharged levels of performance throughout the year. But things are sadly not straightforward. And true to form, those economists – so often the bearer of the information we don’t want to hear – are being proven correct.
Manufacturing PMI showed sector growth slowed again during July, following on from June’s reduction. It fell to 55.4 from 57.2 in June – its lowest level since July 2013. This time the uncertainty over the Russia-Ukraine crisis was cited, following on from foreign secretary Philip Hammond stating earlier this week that any EU sanctions on Russia could greatly affect UK exporters.
Everyone from EEF to Lloyd’s Bank played down concerns, with the former stating the growth in the first period of this year was so rapid that a slowdown was inevitable. My more immediate concerns was the fall of exports to a fourth month low. This market is particularly perilous for the UK. While it’s all well and good for UKTI to outline a £1trn export target by the year 2020, SME firms are still finding navigating the market particularly tricky.
While the Markit report provides comprehensive analysis and, not to mention, many talking points for the likes of me to chew over, there is also a sense of a reality check. Having reached pre-recession levels only last month, there is a cautious realisation that the manufacturing renaissance so often spoken is not here just yet. But that’s not to say the doom merchants have won; there is certainly substance to the notion that now is a good time to be a UK manufacturer. With a genuine belief from companies across the country that the policy makers are finally beginning to measure the sector’s importance, businesses are more confident and investing in equipment and people. If anything, the PMI data provides a timely, monthly reality check.
A cause for celebration or a stark reminder of an industry playing catch-up?
In the IET’s annual survey released on Thursday, common industry concerns centred on the UK workforce were brought to light. Many of these were topics we hear about on pretty much a daily basis – the shortage of skilled engineers being one. Another was the unequal male to female ratio across multiple professions. Again, nothing new. But the detail that spoke to me was manufacturing’s female representation in comparison to other industries.
Of the 400 companies and organisations questioned across 11 professions, manufacturing was placed second with 24%, behind the police with 27%. And although the survey only accounted for a small fraction of UK companies, it gave an intriguing snap shot into manufacturing’s appeal to women as a career. Certainly, I’ve seen factories with a generally balanced mix of male and female workers, if commonly pushing towards the former. But 24% is still too low, and making the factory environment more women inclusive is something businesses need to embrace more actively. Some I’ve encountered are doing just this.
What was more concerning was the low score of female engineers with just six percent. Being so integral to the advanced and high value manufacturing processes shaping the UK’s present and future, better people than me are working to solve this problem. But if anything, it was another stark reminder of what lies ahead. Not only are there not enough engineers to service the future of UK industry, but the female voice in the sector continues to be minimal, almost unchanged since 2008. Given the magnitude of the problem, addressing this is the most unenviable of tasks.
Anyone for driverless?
My colleague Callum Bentley visited the unveiling of two new measures by business secretary Vince Cable earlier this week, giving the green light to driverless cars hitting UK roads by January 2015. That’s right: by early next year there’s every chance you could see what was considered a futuristic oddity just a decade ago cruising the streets of one of three chosen UK cities. And the UK has had to be quick off the mark to compete with the other countries doing it throughout Europe and beyond. The Swedish city of Gothenburg will see driverless cars take to its streets from 2017. Across the pond, Google has unleashed its driverless car on the streets of US states California, Florida and Nevada.
While the insurance issue could prove a potential minefield, so far keeping them on private roads, the benefits of driverless cars one day becoming fully fledged parts of modern life sound appealing. And there’s the three cities which are now open to bid. The West Midlander in me does hope Birmingham puts its name forward. Having tried to manoeuvre the Spaghetti Junction with mixed results, I’d challenge even the most advanced of automated driving systems to try that one. Let that be the mark of whether such technological capability is true progress.