Manufacturing Week will ‘get Lancashire growing’

The county’s manufacturing businesses will be given the opportunity to access free business growth advice during the third annual Lancashire Manufacturing Week being held later this month.

Manufacturing bosses are being invited to attend the free events from June 28 to July 1 which will showcase business support opportunities and inspiring success stories.

Among the issues being discussed will be ‘manufacturing after the EU referendum’, funding options available to manufacturers, tackling skills shortages, innovation, exports and tax matters.

Ginni Cooper, head of the manufacturing team at Moore and Smalley, one of the partners behind Lancashire Manufacturing Week, said: “Lancashire is full of inspiring manufacturing businesses and this week is dedicated to shining a spotlight on them on and how they can achieve greater success.

“Of course, there are many challenges out there too in what is still a fragile economy, but the aim of this week of free events is to equip all manufacturers with the information and knowledge they need to grow.”

The week of events kicks off on June 28 with a roundtable discussion covering key issues for the sector following the EU referendum vote.

On June 29, attendees will get the opportunity to hear about the range of potential funding options available to them, including grant funding, bank finance and private equity. The event will take place at world-leading cask and keg repair business Morrow Brothers Packaging, based at Buckshaw Village, which will share its own success story with the audience.

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On June 30, businesses and education and training providers come together at Westleigh Conference Centre, Preston, to discuss how the county can overcome skills shortages in the manufacturing sector.

The week will finish with the opportunity for businesses to attend a range of free advice clinics. The clinics, by appointment only, will allow manufacturers to get advice from innovation experts at UCLan, tax experts at Moore and Smalley and international trade and funding experts at HSBC.

Lancashire Manufacturing Week is organised by Moore and Smalley, UCLan and HSBC, and is supported by Lancashire Skills and Employment Hub, the government’s Apprenticeships programme, EEF, Themis, East Lancashire Chamber of Commerce and Lancashire Business View magazine.

For more information, or to book a place at any of the events that make up Lancashire Manufacturing Week, please contact Jenny Sabeva at Moore and Smalley on 01772 821021.

Skills Gap Stifling SME Manufacturing Growth

The growth plans of more than one in four of Britain’s small and medium sized manufacturers are being jeopardised by a shortage of skilled people, according to the annual Manufacturing Survey by MHA, the UK-wide group of accountancy and business advisory firms.

The survey, supported by the manufacturing team at Lloyds Bank Commercial Banking sampled 400 predominantly SME manufacturing and engineering businesses, and found that recruitment issues were acting as a significant barrier to expansion for 28% of companies. Unsurprisingly, when asked what should be top of the government’s to do list, a quarter of respondents said they wanted more emphasis on skills training in schools and colleges to help develop the next generation of engineers and technicians.

The report also identifies that concerns over the ‘skills gap’ have had a knock-on effect on the sector’s optimism, with confidence about future prospects declining among 16% of respondents when compared to last year’s results.

Nine out of 10 companies also say their production costs will rise in 2015 for the fourth year in a row, primarily through higher wages. It seems with over 70% feeling unable to increase prices to customers, productivity gains are becoming ever-more important.

Meanwhile, the burden of red tape continues to be an issue for manufacturers, with 98% stating it was a concern for their business – and with over half of these (55%) feeling that the burden of regulation was increasing. The impact of auto-enrolment is likely to have played a part in these findings, says the report.

Ginni Cooper, Head of Manufacturing at Moore and Smalley commented: “The survey provides a valuable insight into the challenges facing a sector with considerable growth potential but one also struggling to recruit the skilled people needed to help deliver plans for growth. While there are some hopeful signs for the future, such as the increase in STEM students at A Level and employers playing a more pro-active role in schools, signposting engineering as a ‘go to’ career in secondary schools could be better. Improvement in careers advice within the education system needs to become a major focus of debate if we are to attract the next generation into manufacturing and engineering.”

David Atkinson, Head of Manufacturing, SME, at Lloyds Bank Commercial Banking, added: “The news that we are facing a significant skills shortage is no surprise, but it should be alarming that the issue is now reigning in the ambitions of management teams across the sector. Without a solution the UK’s manufacturing and engineering industry will not be able to fulfil its potential and we will see the UK economy continue to be dominated by the services sector.

“However, the answer does not just lie with the government. We must all help to tackle the issue and one of the primary reasons we have partnered with the Lloyds Bank Advanced Manufacturing Training Centre is to address the skills gap. Due to open later this year at the Manufacturing Technology Centre, the centre will develop more than 1,000 new engineering apprentices and trainees, ensuring that there is an influx of skilled workers into the manufacturing industry over the coming years.”

Main findings:
• Optimism for growth over the next 12 months is down 16% among respondents, although 76% still predict expansion.
• 28% cite problems recruiting skilled staff as the main barrier to growth, along with a lack of motivated applicants. In addition, 26% would like to see the government expand skills training in schools and colleges.
• 55% expect to increase headcount in the next year, with 56% taking on apprentices or trainees.
• Almost half (49%) are aiming to offset production cost increases through efficiency gains, with 74% of respondents reluctant to raise prices for customers.
• There was a 15% increase in the number of SME manufacturers trading with the Eurozone (now 98% of all exporters), with smaller increases in the numbers exporting to North America (up 2% to 59%) and Asia (up 4% to 50%, excluding China), as businesses seek to expand their markets.
The MHA Manufacturing Survey also finds around eight in every 10 companies committing to R&D investment this year, although surprisingly 17% remain unaware of the benefits associated with R&D Tax Credits. In general investment on plant and machinery, capital expenditure is planned by 92% of businesses, with 48% of these expecting to spend more than last year.

In common with the rest of UK business, the sector continues to grapple with auto-enrolment, with 47% of businesses surveyed fully funding the cost of the programme, and a further 21% undecided on their approach.

Signs of ‘two-tier’ growth, as services race ahead of manufacturing

The results of the latest Quarterly Economic Survey (QES) from the Chamber of Commerce have revealed a further slowdown in the Lancashire economy during the second quarter of 2015.

The new survey, compiled by the county’s three Chambers in association with Moore and Smalley Chartered Accountants and Business Advisors, shows that most key economic balances have remained static or worsened, with the manufacturing sector having a particularly disappointing three months.

The only exceptions to the general pattern of lower balances in Q2 was the rise in service sector domestic sales and orders, giving further evidence that consumer spending continues to be the main driver of the UK recovery.

However, despite the general slowdown in Q2, the survey also found a high level of confidence that turnover and profitability will improve over the coming year; and there are also signs that firms intend to increase investment. There was further good news on inflation, with fewer firms intending to increase prices in the next three months.

Commenting on the results, Babs Murphy, Chief Executive of the North & Western Lancashire Chamber, said:

“The Q2 results highlight some major challenges facing Lancashire businesses. Perhaps uncertainty caused by the general election campaign had some impact on recruitment and investment decisions in Q2. However, continuing problems in the Eurozone, along with slower economic growth in the USA and China, are undoubtedly giving exporters cause for concern.

“It is clear that the UK recovery remains unbalanced and growth is still too reliant on consumer spending. While a healthy consumer sector is vital, much greater efforts are needed to increase the economic contributions of investment and exports – which, in turn, will boost our productivity and help tackle the unsustainable external deficit. The results in this survey suggest that the trade gap could widen even further in Q2.”

Stephen Gregson, Corporate Finance Director at Moore and Smalley, added:

“This quarter’s results seem to suggest a weakening on the prior quarter and a year ago. I say ‘suggest’ as we have to remember that the survey is more of a ‘straw in the wind’ as opposed to a thermometer and don’t forget either that we have been here before over the last few years.

“The QES results have tended to follow an up and down profile over time. I think that this is to be expected as the UK and the rest of the world, especially our key trading partners, continue to feel the continued aftershocks of the worldwide recession.

“I would advise very strongly against both being too cock a hoop when we have a strong set of quarterly results – but also don’t be too pessimistic if they have weakened a little. To a degree, we appear to be in an era of ‘ebbs and flows’ in the QES and other economic indicators and this may well be the new normal.”

To read the full survey report, please click here.

Five ways for manufacturers to solve the ‘productivity puzzle’

The ‘productivity puzzle’ and the ‘productivity gap’ are two phrases you may have heard quite a bit over the last few months.

 

While there is no doubt the UK economy is growing, there are concerns at the highest levels of government about the quality of that growth. In other words productivity, the value of output per hour worked, is not where it should be.

 

According to economists, the increases in national output since the economy bottomed out in 2009 have been largely the result of a bigger population and an increase in the workforce. The argument goes that, so far, we have not seen the usual pickup in productivity that normally accompanies an economic recovery.

 

There are fears that the length of the recession and downturn, and the lack of investment this spawned, has severely dented UK productivity and, hence, it has not recovered as quickly as it did following previous recessions. It’s one of the reasons chancellor George Osborne says he will publish a productivity plan in the coming weeks ahead of the summer budget in July.

 

So what can manufacturing companies do themselves to boost productivity within their own business? Here’s some thoughts on how businesses can use a range of tax incentives, business support and employee relations initiatives to boost productivity.

 

Renew ageing plant and machinery

 One of the reasons for our low productivity in the UK is thought to be that we’ve spent less than our European peers on plant and machinery. Companies have run their assets into the ground, rather than replacing them with new and better equipment. Instead, they have used cheap and plentiful labour, rather than increased capital, to expand output. With the shake-up in the banking sector leading to greater availability of funding, and generous (for the time being) capital allowances, now could be the time for manufacturers to steal a march on their competitors by investing in ailing infrastructure.

 

Invest in training and skills

The quality of the workforce is another key to increasing productivity, yet George Osborne pointed out recently that the UK is “one of only three OECD countries where the skills of our 16 to 24 year olds are no better than our 55 to 65 year olds”. There is an opportunity for businesses to increase their productivity by improving the knowledge and skills of their staff, as well as improving their recruitment and selection processes. With a range of business support programmes focussed on skills, many of them subsidised by government schemes, now could be the perfect time to assess what skills and knowledge could take your business to the next level.

 

Strive for greater employee engagement

A happy workforce is a more motivated workforce, or so the old adage goes. Achieving better employee engagement and loyalty can bring major gains in output and quality. Look at ways to reach out and build better relationships with staff. It may be something as simple as creating an employee forum where staff ideas can be heard and acted upon, communicating more regular on company issues, or introducing a staff rewards scheme.

 

Find ways to work smarter not harder

This has a tendency to be one of those annoying management phrases, but when you actually boil it down, it make perfect sense. Focusing more energy on the more profitable work, finding small improvements to work processes, or reducing waste, are all examples of a ‘smarter not harder’ mentality.

 

Look towards lean

 It goes without saying that a less wasteful business is a more productive business. Most manufacturers will be familiar with lean principles, but how many actually practice them? By committing to introducing a lean culture, your business will be able to achieve more with less. Going lean doesn’t necessarily mean bringing a group of external management consultants, it’s more about having the will to realise a vision and getting staff engaged to work towards a common goal. It’s often achieved through incremental changes over time, rather than being something that happens overnight.

 

Ginni Cooper is a director and head of the manufacturing and engineering team at Moore and Smalley.

Post-election: The key issues for UK manufacturers

After months of uncertainty, the UK general election result earlier this month has finally brought some clarity to the future direction of the nation and the economy over the next five years.

 

I would imagine many manufacturing businesses are breathing a sigh of relief now the election is out of the way, but now the hard work starts.

Just as the new Conservative government has set out its plans in this week’s Queen’s Speech, manufacturing and engineering businesses face the task of devising their own strategies for making the most of opportunities for growth.

We always advocate that businesses focus on conditions in their own business and sector, not getting too carried away with what’s happening in the wider economy. However, here I set out the main considerations for UK manufacturers as a new political and economic cycle gets underway.

 

Britain’s membership of the EU

David Cameron has promised an in/out referendum on Britain’s membership of the European Union by 2017, but it could happen as soon as autumn 2016. There have been differing views on what impact this will have on the UK economy, particularly manufacturing and engineering businesses whose main trading partner is the EU.

There are fears it could shrink the economy on the back of weaker trade and reduced inward investment, as well as reducing the UK’s export markets and making imports more expensive. Meanwhile, figures like Lord Bamford, chairman of construction equipment giant JCB, believes an EU exit could actually benefit Britain as we would be able to “negotiate as our country rather than being one of 28 nations”.

 

Making the most of growth incentives

Many manufacturing and engineering businesses will be busy making plans to invest in new plant and machinery. The timing of these investments could be critical, particularly with the changes expected to the Annual Investment Allowance (AIA) at the end of this year. The AIA is currently £500,000, but is due to go down to £25,000 on January 1 2016. The chancellor said in his Budget in March that the reduction in the AIA will not be this drastic, but gave no further details. We will have to wait until the autumn before we find out his intentions, which is not helpful to businesses that wish to plan their investment.

Manufacturing businesses need to consult closely with their professional advisers on the timing of investments and to ensure they are also making the most of other incentives and tax reliefs available, such as R&D tax reliefs.

 

Corporate tax rates

The reduction in corporate tax rates over the course of the last parliament will have offered a welcome boost for many manufacturing businesses. The main rate of corporation tax fell throughout the last parliament, from 28 per cent in 2010 to 20 per cent from April 1 2015. This brought it in line with the small profits rate and so effectively created one corporate tax rate. With the Conservatives now governing alone, there’s no indication that corporate tax rates are going to rise anytime soon, which will offer some stability for manufacturers.

 

Finding the right people

This has been a major challenge for businesses across many sectors, but has been felt acutely by manufacturers, many of whom have struggled to replace skills lost to the recession. It will continue to be a challenge, but the manufacturing and engineering sector should be encouraged by the noises the government is making on job creation and skills. As part of the Full Employment and Welfare Benefits Bill in the Queen’s Speech, it plans to create three million apprenticeships.

 

Cutting through the red tape

Also in the government’s Queen’s Speech was an Enterprise Bill with measures to reduce regulation on small businesses in a bid to boost job creation. It will seek to cut red tape for British business by at least £10bn and also proposes to create a new Small Business Conciliation Service to help settle disputes between small and large businesses, especially over late payment practices. The government also aims to improve the business rates system ahead of the 2017 revaluation, including modernising the appeals system.

 

As always, businesses face a number of opportunities and threats. If you are a manufacturing or engineering businesses looking for some professional advice on your investment decisions, or to support growing your business, please don’t hesitate to contact me.

Occupational Health

Can Occupational Health help your engineering and manufacturing business? – Yes absolutely.

 

Occupational Health is a valuable part of looking after your workforce and ensuring compliance with both best practice and with legislation.

 

The management of sickness absence is a crucial function in any organisation and Occupational Health support and advice is often a valuable part of that function – helping absence be managed appropriately and advising on necessary adjustments to be made on return to work is key. Similarly managing concerns regarding with performance, which may have a health dimension is clearly important and are likely to require specialist advice.

 

Recruiting the right people into your team is a multifaceted process but confirming that those you recruit are fit to do the role and are not at risk of developing problems as a result of their work is a key part of that process. An Occupational Health Provider can design a suitable assessment program, related to role and attendant risks, to support recruitment.

 

Within manufacturing and engineering environment there may be a range of hazards including, metalworking fluids, paints, solvents, welding fume etc, all of which require careful management. Health surveillance, regular health checks on those undertaking certain processes, is a vital part of that management in ensuring that such hazards are under good control and ensuring robust compliance with Health and safety legislation.

 

Musculoskeletal problems in the workplace are very common and are an important contributor to performance difficulties and sickness absence. Specialist ergonomic assessments are available to look at particular processes, for example in repetitive manufacturing or assembly work, to help in the design of the work and contribute to product quality and performance together with minimising health risks.

 

Those employees who undertake specific tasks such as drivers, working in confined spaces or at heights need particular attention to their fitness to undertake their role. An Occupational Health assessment will help make sure that those employees are fit and hence reduce any risks to themselves, plant and others

 

Occupational Health can also improve the well-being of your staff – for example wellness based health checks are not only an important opportunity to promote health and well-being but are also valued by the employees and an important part of developing an engaged workforce.

 

A comprehensive assessment of the risks facing an organisation and developing a tailor-made service aligned to the organisations activities and their values is a beneficial function of a responsive Occupational Health service bringing cost savings, risk reduction and improved staff wellbeing and engagement

 

Dr Tony Mawson
Consultant Occupational Physician
Director, Organisational HealthCare Ltd

Making the most of Lancashire Manufacturing Week

This month sees the second annual Lancashire Manufacturing Week, a week of events focused on helping the county’s manufacturing and engineering businesses to develop and grow.

 

It comes at a relatively positive time for the industry generally with recent figures showing activity at an eight-month high at the beginning of April and GDP expected to grow strongly over the next 12-months.

 

Focusing on business improvement

The brighter outlook is also evidenced on a local level by the latest Lancashire Quarterly Economic Survey, which shows that recruitment intentions in the regional manufacturing sector remain strong.

 

While the dangers of election uncertainty and fears over a possible Greek exit from the Euro remain, it would appear that the manufacturing sector is in rude health.

 

In the spirit of making hay while the sun shines, Lancashire Manufacturing Week offers an opportunity for manufacturers to focus on business improvement.

 

The events we have organised, in collaboration with HSBC and other regional and national partners, will encourage manufacturers to concentrate on strategy and innovation as a path to growth.

 

Inspiration

It will also be an opportunity for manufacturing businesses to gain inspiration from their peers, understand how they can become a more attractive employer, and find out more about the wealth of funded business support available in the region.

 

Personally, I’m excited to be involved once again in these events as we look to establish Lancashire Manufacturing Week as a permanent fixture of the county’s businesses and economic calendar.

 

Here’s full details of our Lancashire Manufacturing Week events and how to book your place. We look forward to welcoming you.

 

Ginni Cooper is a director and head of the manufacturing and engineering team at Moore and Smalley

 

 

How to survive volatility in the Eurozone

The possibility of a Greek exit from the eurozone, or a Grexit as it’s been dubbed, has looked increasingly likely in the last few weeks after the country voted in an anti-austerity party in recent elections.

 

The country is currently seeking to renegotiate the terms of its EU bailout. If it fails to reach an agreement, Greece will effectively default on its sovereign debt and be forced to leave the euro. There are concerns this could destabilise the eurozone if other countries, such as Portugal, Ireland, Cyprus and Spain, take the same position and look to renegotiate their own terms with creditors.

 

Whatever the outcome of the negotiations, if you’re a manufacturing and engineering business that trades with Greece, or you have operations in other unstable EU countries, you need to have plans in place to protect your interests.

 

While it’s impossible to fully insulate your business from all risks, here’s some practical steps for how you can look to mitigate any potential impacts.

 

Identify potential supply chain problems

If companies in your supply chain are exposed to problems in countries at risk of exiting the euro, this may cause you an issue further down the line. If this is the case you might need to consider finding new suppliers, or holding extra stock until you are able to determine your next move. Over dependency on one supplier is not good in any situation, but if that supplier is in a financially and politically unstable country this is major risk for your business.

 

Review contracts and consult your lawyers

Businesses in a country exiting the euro will be left in legal and financial limbo. Some of their contracts will be governed by local law, and could be converted into a new currency, but foreign law contracts, such as those with your business, would remain in euros. However, many of these could end up in legal disputes and you may not get paid at all. If you receive a payment in a local currency, it will probably be worth substantially less than receipt in euros due to currency devaluation. This is an issue you should look at closely with your legal advisers to assess any potential impacts.

 

Broaden your export horizons

In the same way financial and social unrest in a foreign jurisdiction can hit suppliers, it could be disastrous if the majority of your export customers are based there. Companies in countries exiting the euro will likely owe big debts in euros to foreign lenders leaving them facing bankruptcy. This could cause problems in the wider eurozone as businesses cut investment and consumers cut back their own spending. With talk of the eurozone potentially being pushed into recession, it’s sensible not to have all your eggs in one basket. Examine whether there are opportunities to open up new markets further afield, perhaps in emerging economies in the Far East and Americas.

 

Put a plan in place

As always, preparedness is the key to dealing with any potential crisis. Consider a range of potential impacts and put contingency plans in place for dealing with these threats. For example, prepare different cashflow forecasts that take into consideration the impact of losing a major export customer, or consider how you will fulfil orders if it takes longer to get paid by customers. This is all part of sound risk-management which is a good habit to get into anyway.

 

Stay positive

While the constant headlines about eurozone exits and sovereign debt defaults can be unsettling, it’s important to remember not to panic. Monitor the situation, but don’t let it affect your thinking more than it ought to, or force you into irrational decisions. As I’ve always said, the decisions you take need to be based on your own management information and conditions within your own sector, which may render the eurozone situation insignificant.

 

Ginni Cooper is a director and head of the manufacturing and engineering team at Moore and Smalley.

Seven New Year growth pledges for UK manufacturers

The start of the year is that time we all make resolutions to be better people and break bad habits.

 

It’s the same for businesses as it is people, so for my first manufacturing and engineering blog of the year, here are seven pledges I believe all manufacturing and engineering businesses can make to achieve their growth aspirations this year. Repeat after me:

 

I will invest in research and development: The ability to innovate is what makes manufacturers successful. With generous R&D tax reliefs available, there’s never been a better time to invest in research and development to stay at the sharp end of your sector. You’d be surprised as what qualifies for R&D too. It isn’t just the domain of major drug companies and science businesses, almost any business can qualify if it can demonstrate using research to resolve a technological uncertainty.

 

I will invest in my workforce: Businesses can’t grow without the right people. Convene a meeting with your senior management team to identify the skills needed in the business and make it a priority to fill those gaps. Whether it’s bringing in an experienced manager or starting an apprenticeship programme, take action to stop your workforce stagnating. In many areas, financial support is available for training your employees.

 

I will become an exporter: By limiting your customer base to the UK you are potentially missing out on lucrative new revenue streams. Many manufacturing businesses believe they are too small to export, that there is no market for their products outside the UK, or that the prospect of dealing with international customers is just too daunting. But it’s not as hard as you think and there’s lots of support available from organisations like UKTI.

 

I will get to grips with modern marketing: Digital media has changed the way businesses cultivate new sales opportunities. While traditional marketing methods still apply, you could be missing out if you are not making the most of your website. Is yours up-to-date? Does it reflect where your business is now? Can people view it on phones and tablets? Could your business benefit from video and social media? Speak to the professionals to get the most from your marketing.

 

I will make my knowledge razor sharp: Technology continues to change at seemingly unrelenting pace. If you don’t keep up there’s a chance you’ll be left behind. Set time and budgets aside for finding out about new and emerging technologies and other developments in your sector. What new plant and machinery is available? Could you benefit from tax breaks for investing in new kit? Could your business benefit from 3D printing or robotic production? Pride yourself on being in the know.

 

I will get into good habits and stick with them: We’re all guilty of letting our resolutions slip as the year wears on, but if you focus on doing fewer things well and making incremental improvements it’s easier to stick with them. Look across the business and pick one thing that you will do better in the finance team, one thing you will do better operationally, one thing you’ll do better from a HR perspective. Not trying to solve every single problem straight away will make it easier to focus.

 

I will invest in trusted thinking: Nobody can do it all on their own. It’s about having a good team around you where different skills complement each other. This extends to your external advisers too. Invest in relationships with advisers you trust implicitly, whether that’s your accountant, lawyer, mentor, a non-exec director, marketing manager, or other consultant.

 

For more information, please contact Ginni Cooper.

Autumn Statement 2014 series: Put skills at the top of manufacturing agenda

I have discussed in a number of recent blog posts how the skills gap is still a major concern in the manufacturing and engineering sector.

 

While there has been some collaboration between some of the big companies, notably Siemens and Renault, and the education sector, I would like to see more incentives for smaller manufacturing and engineering businesses to engage with their local schools and colleges.

 

The creation of University Technical Colleges (UTCs) for 14-19-year-olds, led by universities and funded in part by large manufacturers, is a step in the right direction for equipping people in education with the right vocational skills they need to secure employment in industries such as manufacturing.

 

In our recent MHA manufacturing report we called for greater steps towards ‘demand-led’ education and I would like to see the chancellor pledge further financial support to encourage more initiatives of this kind.

 

Elsewhere, energy costs are a significant concern to manufacturing businesses and some sort of control needs to be gained over the constant price rises businesses are seeing. Whether this would be through some form of tax rebate or other payment for the most productive manufacturers I’m not sure, but something has to be done.

 

I fear that all the good news around re-shoring and making the UK a competitive place to manufacture will be lost if these rises are allowed to continue to erode margins.

 

Ginni Cooper is head of the manufacturing and engineering team at Moore and Smalley.