Skills, public sector procurement and supply chain development were the key themes on the agenda at this morning’s ‘Hidden Strengths’ debate, organised by Yorkshire Business Insider.
“The Leeds City Region is one of the most important centres for financial and legal services but it also has one of the biggest manufacturing clusters outside London and manufacturing has a key role to play in rebalancing the economy,” says Insider deputy editor Ben Pindar. “But confidence is shakey, access to finance is tough, while international trade levels and skills remain major issues.”
Jason Whitworth of BDO, which sponsored the event and also publishes the Manufacturing Outlook report in association with EEF, said there were positive signs for the sector, with 11 per cent of manufacturers reporting an increase in output over the last three months.
“The key thing that didn’t come out of the budget was any movement on capital allowances, which are key to getting businesses – and in particular manufacturers – investing.”
“Exporting is still a huge opportunity,” he added, pointing out that while Yorkshire businesses are good at exporting to Europe and Ireland, there is still lots of room for growth in worldwide markets.”
Panelists at the breakfast event agreed that the sector still suffers from serious problems when it comes to public perception.
Optare chief executive Jim Sumner argued that addressing the image question is key to getting the next generation into manufacturing and addressing the industry’s ageing workforce profile. “The investment that other countries are making in education, particularly in engineering, is far in advance of what we are doing in the UK.”
Andy Tuscher, regional director for the EEF, added: “It’s very worrying that large manufacturers are struggling to recruit the right calibre of people. We train people in engineering in the UK but they often don’t stay in manufacturing.”
The problem is certainly about image, but it is also about education, he argued, quoting the example of a large manufacturer based in the North East that struggled to recruit 25 apprentices from a pool of 2,000 applicants. “It’s far too easy to see training and development as a cost rather than an investment,” he said.
It’s a common problem for manufacturers across the UK, observed Gary Jones, chairman of Group Heights and a board member of the Leeds city region LEP: “All the skilled guys are going to be retiring in the next ten years. When it comes to large development projects that require prototyping, R&D or project management expertise, we’re having to pull people in from China and the US.”
Public sector procurement is a key area in which many feel government at all levels can help to support UK manufacturing. For Andy Tuscher, putting pressure on government to use UK suppliers for large scale projects such as high speed rail, is essential to protect supply chains and generate employment.
But he recognised that UK manufacturers also need to up their game and, where necessary work collaboratively, to upskill and upscale to compete for business and win contracts.
Jim Sumner pointed to the US and other countries, which apply a domestic content rule to public procurement, forcing overseas suppliers to set up operations and create employment there. He warned that procurement policy which goes for short term benefits rather than looking at long term implications, results in the ‘hollowing out’ of supply chains and skills.
“You cannot leave manufacturing strategy and industrial policy to the free market because nobody else does,” he said, adding that local supply chains can actually be a key source of competitive advantage, allowing manufacturers to respond quickly to changes in the economic environment.
But he counselled that manufacturers need to be alive to the opportunities presented by overseas markets: “Export remains key. British goods are prised in other parts of the world and we have a great deal to offer, although we probably don’t do a great job of leveraging this.”
“There are phenomenal opportunities in place such as India and other EU countries are exporting far more than we are, without the legacy and linkages we have with that country.”
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