EEF 2017: “Manufacturers must not stand still”

During a day of stimulating discussion and debate, the EEF’s National Manufacturing Conference last month signalled a call to action for the UK to capitalise on the opportunities being presented a post-referendum era. Leanne Taylor reflects on the key points from the day.

Some twelve months on from his passionate call for the UK to vote to remain as part of the European Union, Terry Scuoler, CEO of EEF, said the events which have transpired in the wake of the referendum in June last year have “the potential to be cataclysmic.”

Opening the conference this year, Scuoler said that despite the manufacturing sector showing signs of resilience in the aftermath of the vote, uncertainty and risk remain.

“The process of exiting the EU is yet to commence and the negotiation process will be brutal. Brutal, not just behind the scenes during the process, but also very much in the public eye,” Scuoler told delegates.

During these negotiations, he emphasised the importance of reaching a deal that works for both the UK and the EU, with key pillars of talks, including ongoing access to the single market and a demand-led mechanism to allow businesses to continue to attract and retain employees from the EU, vital for the future success of the industry.

However, Scuoler said that, as with any challenges arising from a change to the status quo – be it Brexit, the move to digitalisation through the fourth industrial revolution (4IR), solving the issues around productivity or exporting – there would also be opportunities.

He urged manufacturers not to “stand still”, but to capitalise on these opportunities, including the chance to contribute to the Government’s Industrial Strategy consultation. “It is a strategy that calls for partnerships and collaboration, industry working hand in hand with Government and other stakeholders to make this work for Britain. This is an opportunity and one that all of us must work hard to shape and implement,” he added.

Clear challenges

Following Scuoler’s address, Ian Issac, Managing Managing Director of Lombard, told delegates that “it was clear where the challenges lie” for UK manufacturing, and these are clearly defined in the 10 pillars of the Industry Strategy green paper.

“Skills, education infrastructure, research and innovation are all areas where we need to concentrate our efforts,” Issac explained. “For me, the notable message from both the years of research, as well the green paper, is the productivity puzzle that needs to be solved.”

Issac said that the apparent inertia of businesses to invest in new machinery and technology is where the key issues surrounding ongoing productivity issues lie, highlighting a recent survey that suggests although 50 percent of manufacturers questioned plan to invest in 2017, the other 50 percent do not.

“It’s easy for manufacturers to focus on what needs doing today and it is a challenge to find time to think about the future. However, if that time isn’t set aside then the future has a habit of catching up on us,” he continued. This, he added, was an incentive for businesses to “tool up for 4IR,” adding that this would help “multiply our strengths and find the last bit of the productivity puzzle.”

A call for change

In his address, Shadow Chancellor, John McDonnell MP, said Brexit was “a call for change”, stating that the next two years would involve a long process of detailed negotiations.

He said that manufacturing must be a crucial consideration in these negotiations, adding “if Britain is going to prosper after Brexit then manufacturing must have a central place.” Part of this, he added, is ensuring the industry is not concentrated in “a central hotspot”, but throughout the UK.

McDonnell highlighted the importance of seriously addressing reshoring, skilled workers, business rates and access to broadband for a manufacturing industry that is successful and central in the future.

Being competitive to survive

In the panel discussions sandwiched between keynote addresses, Martin Wolf CBE - Chief Economics Commentator, Financial Times, said that UK businesses “face an immense amount of uncertainty” in the future, with regards to the outcome of Brexit, those that are pragmatic with decisions and competitive in the marketplace most likely to ride out the storm. “If business do nothing in the next ten years whilst this is all sorted out – they’re dead” Wolfe cautioned. “You must be competitive, this is how businesses will survive.”

Alison Rose, CEO, Commercial and Private Banking, Natwest, said that despite a slowdown in the months preceding the referendum vote, manufacturers have not slowed in their demand for finance since. This, she added, is largely as nothing has - as yet - changed. However, she echoed Wolfe’s call to action for investment and for manufacturers to make this a priority in order to be successful in overcoming known future challenges.

Why manufacture in the UK

The final discussions of the day focussed on the strategic importance of Britain as a manufacturing hub from the perspective of some of the UK’s biggest companies. Jurgen Maier, CEO at Siemens, said that the knowledge and technical skills of workers in the UK was key.

“Why is the UK a good place to manufacture? Well, I’d say skills. There are highly qualified peopled that we can access to work in our factories, combined with good R&D and innovation from our Universities. Also, there’s a pretty good policy framework and a tax system that supports us, despite all of our criticisms of skills and business,” he explained.

“But, and there is a but, and that is that we don’t keep the levels of productivity that we ought. It’s down to not enough investment in technology, digitalisation and automation. We lack behind considerably in these areas, particularly automation. Certain studies have shown that if we invest on a par with Germany and China then we can compete on a very high level.”

Maier said that there was an opportunity for Britain to “leapfrog” its competitors if it took the uptake of new, digital technologies seriously at all levels, and if there was a consistent message around 4IR.