Tony Hague, Midlands Assembly Network Chairman, believes the missing piece to the productivity puzzle can be found on the UK's factory floors.
I think most of us in industry are a bit tired of economists pontificating on the root causes of the ‘Productivity Puzzle’ and giving us their verdicts on how we can embrace the missing pieces of the jigsaw.
Many run off a long list of excuses and, to be fair, a few of them probably ring true with some companies.
As chairman of the Midlands Assembly Network, I have the great privilege of meeting regularly with eight managing directors of sub-contract manufacturers and the boss of a multiseat design agency.
In every company, the attitude is the same when it comes to increasing productivity. The good news is that every last one of us wants to do things better and achieve more output from the input our workers are putting in.
We are also agreed that the only way to eradicate the puzzle is to take things into our own hands and control our destiny.
Manufacturers can’t exclusively lay the blame on the feet of a meddling Government. Sure, there are things that can be done better, but additional support on its own can only deliver so much bottom line benefit.
So what is holding us back?
I think the general rule is that SMEs have always considered themselves as not being suitable for new technology and automation. ‘It’s something the big boys do, why do we even need to think about it?’
This has been an easy excuse for a long-term lack of investment in new machinery and the workforce – one that is now coming back to bite and bite hard.
Years of slow spending has seen a lot of international rivals take over us and only now are we beginning to see big support bodies, such as the Manufacturing Advisory Service and EEF, cite encouraging research that industry is finally beginning to release the financial restraints.
One of the biggest first battles is between the MD and the financial director. The former needs to convince the latter that the ‘spend’ is going to change the way the business works and payback will be there in both the short-term and the long-term.
If you can overcome this hurdle then it’s a case of trying to convince your funding source (often the bank manager) that you have a solid business case for the loan you need to buy that new laser cutter or CNC machining centre.
And manufacturers don’t help themselves here. Too often poor business plans result in a ‘no’ from the bank and rightly so. Yet industry sees this as a lack of backing for manufacturing.
From what we are seeing the banks are trying to understand our sector more, just take the specialist training Lloyds Bank have instructed Warwick Manufacturing Group to carry out for them.
The other big area to address is that productivity can’t just be achieved by buying a shiny new piece of kit. That’s important, but it only works well if you invest in the other elements of your business, most noticeably your workforce.
Get young people involved through apprenticeships, upskill your existing staff so they deliver more and embrace leadership and management support though the Business Growth Service.
To get the maximum productivity gains there has to be balance between the two and the common thinking suggests that if we actually get this balance right, we could find the key for unlocking the ‘Productivity Puzzle’ for the next generation to come