Uncertainty is the enemy of investment say manufacturers

Posted on 5 Mar 2014 by The Manufacturer

EEF’s National Manufacturing Conference got underway this morning with clear messages from speakers for government to provide economic stability and certainty about the business environment to stimulate manufacturing growth and encourage reshoring.

EEF CEO Terry Scuoler called for government to take action on uncompetitive energy costs.

EEF’s chief executive Terry Scuoler was first to speak today.

He welcomed delegates and gave insight into his recent work to promote the interests of EEF members and the wider UK manufacturing to government – both in the UK and across the EU.

He reprimanded government for not acting assertively enough to reduce uncompetitive energy taxation in the UK and called on the Chancellor to clarify his intentions in this area in his forthcoming Budget announcement.

Mr Scuoler also gave insight into his recent private meeting with German Chancellor Angela Merkel in which he advised her on the concerns of British industry ahead of her address to both British Government Houses on February 27.

Scuoler assured that he had told Mrs Merkel of the overwhelming desire from business to remain a strong partner in the EU. A recent EEF survey on the subject showed that 85% of manufacturers feel it is important to the competitive position of the UK to do so.

Scuoler’s comments on the need for certainty on this topic, and more generally on the need for certainty about the business environment in the UK struck a chord with the messages of other speakers.

Nigel Stein, CEO of GKN delivered the morning keynote and said “uncertainty is the enemy of investment” after responding light-heartedly to a delegate suggestion that a vote for Scottish independence might cause a spate of ‘reshoring’ south of the border.

Mr Stein’s speech also delivered messages to UK manufacturers looking to follow in its footsteps and become globally recognised in their fields.

“Focus on being the best”, he advised as he described GKN’s evolution in the course of a decade from being a rather confused collection of businesses to a quality engineering firm with clarity of purpose and a structured growth strategy which has leadership and a global outlook at its heart alongside operational excellence, innovation and technology and a will to outgrow its markets.

Key points and excerpts from Nigel Stein’s speech at EEF’s National Manufacturing conference can be read here.

Reshoring was the hot topic for a morning panel session which included representation from premium chocolate company Hotel Chocolat and cushion manufacturer Caldeira which have both recently reshored operations – Hotel Chocolat from Europe and Caldeira from China.

These representatives also latched onto the need for stability with Caldeira’s Tony Caldeira saying that the most important single thing government can do to support the return of more manufacturing to the UK is to “stick to their guns” and continue to focus on delivering “hard won economic stability”.

Angus Thirwell, the founder of Hotel Chocolat echoed this message but emphasized that SMEs in particular need government to “stop tinkering” with initiatives to help growth and simply allow busiensses to make the decisions they need to easily.

“I’d like to see a great rolling back of complexity,” he said after also stating that he felt excessive business rates in the UK were a “stifling blanket over start ups,” which could spur more reshoring thanks to their inherent agility and flexibility.

Hotel Chocolat chose to reshore it manufacturing to the UK after finding that the supposed quality and expertise in chocolate making on the continent were the “emperor’s new clothes” and that it could maintain both the quality and individuality of its products and brand much more effectively by bringing design and manufacture under one roof.

Other  challenges and opportunities around reshroing discussed in this panel session included exchange rates and the potential impact of 3D printing as a catalyst for the creation of a new wave of micro manufacturers.

Tony Caldeira said the that a drop in the value of the pound against the Chinese RMB was an important enabler for his reshoring project but rejected the idea that a rising pound will now make reshoring unattractive.

“The pound is now rising as a consequence of businesses seeing the UK as a positive place to invest,” he said.

Interactive voting at the conference showed that delegates were mildly hopeful of the ability of reshroing to make an impact on overall economic growth in the next five years with 65% of almost 700 delegates saying they believed it will have a modest impact on national growth.

It should be noted however, that a delegate question directed at Ms Lee Hopley, chief economist at EEF and a key contributor to EEF’s Backing Britain report on reshoring, highlighted that reshoring is not a net trend in the UK.

“The point is that there is now two-way traffic,” Ms Hopley clarified. “We want to make the UK as ‘sticky’ as possible,” she said.

A summary of key points from the afternoon of the conference is now available here.