British manufacturing worst in the world – says report

osborneGeorge Osborne certainly has a lot to answer for – UK manufacturing has shrunk twice as fast as other other developed nations since 2000, with more than 100,000 jobs lost.

In a wake of a further budget, a report by the respected think-tank, the Institute of Public Policy Research (IPPR) exposed the steep decline of UK manufacturing by announcing that Britain’s manufacturing base is one of the worst performing of the world’s developed countries.

Output in our once world leading Steel and chemical industries have stagnated during the economic recovery and have seen at least 100,000 jobs disappear in recent years.

The stagnation of ‘foundation industries’ like basic metals, chemicals, wood and pharmaceuticals also threatens the success of the governments plans for a ‘Northern Powerhouse’, with many of those sectors are concentrated in the North, Midlands and Wales.

Some 90% of domestic demand for chemicals and metals come from imports – some of them subsidised by the British taxpayer, up from 40% in the 1990s.

The report suggests that an increase in these core manufacturing sectors of just 1% in UK production would add an extra £2.3 billion to gross output and create 19,000 jobs. So it is clear that there needs to be renewed calls for government action to stop the dumping of steel and other metals on British and European markets by China and Russia.

The report goes on to suggest a number of, seemingly sensible, options to help recovery; The provision of reduced energy costs for steel-makers and other firms, a regional growth fund underspend should be used to boost struggling industries such as aerospace, automobile and pharmaceutical manufacturing and a new ‘right to buy’ for employees to take over firms that are about to close or be sold off.

The later, to my mind, is perhaps the most interesting of these.

You can read the full report here.

 

Britain set to be the only leading economy to not make steel.

03_03032715_6a8f8e_2776782aIn the Victorian era, Britain was responsible for 40% of the global supply of steel. It may soon produce nearly none at all.

Should Tata sell off its sites in Scunthorpe or Port Talbot, following the closure of their Redcar plant last year, Britain would become the only member of the G7 no longer making steel.

British steelmaking has been in decline for more than a century. By the start of World War I our industry was overshadowed by the USA and was quickly followed by Germany.  By the 1980’s we produced less than 10 million tons, slipping below France, Italy and Belgium.  China is currently by far the biggest producer making 1.67 billion tons of steel, equal to about half of the worlds supply.

But it does beg the question, in a country fueled majoritively by financial services, whether a major industrial economy needs to produce steel at all?

The two sides of the story

It seems that there are two opinions regarding Britain’s need to produce steel.

It is clear that, for the foreseeable future, steel production in the UK is unprofitable. If we engage in a bailout, as many are calling for, we a likely locking both capital and labour into unproductive work. It could be tantamount to giving up on Capitalism all together.

However, as the British automotive industry is currently churning out 1.6 million new vehicles each year. The government has plans to produce, in the short-term, a new high speed rail network, invest Billions in the Trident nuclear program and build a new power station at Hinckley. All of these projects will require hundreds of tons of steel.

Although I read an article in The Sun this morning and it appears that it may never have been on The Governments agenda to use British steel in these projects in any event. It transpires that many of the large scale steel contracts, since the Conservative government took power, have been going abroad anyway thus reversing a previous ‘buy British’ policy for defense projects. (see the image right for details)

It would seem that our own government is conspiring against us fpr years and is, at least partly, responsible for the current situation.

In the sort-term the closure of the furnaces will affect the people in the communities whose welfare relies on them but in the long-term, it will lessen the integrated capabilities of the UK to do anything. The knock on effect could ultimately decimate Britain’s core manufacturing base.

Ultimately is seems essential that such a primary infrastructure, like steel, is protected in order that it can underpin our already stretched manufacturing sector.

In my humble opinion the only option is re-nationalisation but this option looks to be off the cards for this Government.

 

A normal British family’s view on the EU Referendum – a clear guide to the winners and losers following Brexit.

On 23rd June 2016, Britain will vote on whether to leave the European Union. Debate abounds as to the advantages of staying in the EU or choosing to ‘Brexit’, with many focusing on the financial advantages/disadvantages of either option. Having weighed up the options here is our view of things.

The death to the City?

City_of_LondonTo turn a phrase – news of the death of London has been greatly exaggerated. Whatever the decision come June it is clear that there will be both winners and losers, and the City of London, at least in the short-term, is likely to suffer if a split from Europe is decided. The City of London can be perhaps be considered the financial center of the EU and a Brexit is sure to weaken its domination to some extent but it is such a strong financial centre that is it would soon bounce back. And unlike other areas of the UK economy, such as manufacturing, the City is strong enough to take the pain. Ultimately, London does too much business with Asia, the Americas, the Middle East, and the world in general, to lose out entirely to Paris or Frankfurt.

The truth is that effects of the anticipated, if modest, contraction of the City would still have a knock-on effect on the rest of the UK economy in the short-term but would likely offer opportunities to other areas of the UK.

London property bubble to burst

apartments_east_london_interiorcgiIf you own property in London, where house prices are vastly exaggerated over the rest of the country, you might expect to see a decline on your investment. Some analysts predict that your your city apartment might hemorrhage as much three quarters of it’s current value as the foreign investors move out.  Bad news for us some in the short-term but in an economy of wildly inflated, and frankly unsustainable, property prices it could offer a real lifeline for the younger generation. Sure the cash-cow property has been over the last 20 years would be put out for slaughter but it would enable Millennials working in London to buy houses at more reasonable prices and could make it a much more attractive commercial centre in the longer-term.

Pound Plunge

p14%20cash%20mf79The pound has fallen by 17% against the dollar over the past two years and would likely decline further if Britain were to leave the EU. The net result would likely mean a fall to around 1-to-1 against the U.S. dollar.

However, Britain runs a perpetual balance of payments deficit, so a lower pound would stimulate the British export industries. This is fantastic news for British manufacturing making us far more competitive than we have been in over 30 years.

Now being free to negotiate our own trade deals to the rest of the world we would certainly see a dramatic rise in production outside of financial services.

Scotland

scotlandThe Scottish independence referendum in 2014 was a vote in favour of staying in Britain, but only just. It is likely that, following a Brexit from Europe, there would be renewed insistence from Scotland to a further referendum to leave Britain with a view to them cementing alternative relations in Europe.

While this issue prompts further debate on the likelihood and effects of a split between Britain and Scotland, it does serve to complicate the current debate at hand.

Bye Bye Brussels Bureaucracy

EU_2359400bBeing in Europe costs us a around £55 million each and every day and this figure does not include huge amount in regulatory costs.

With those costs gone, taxes reduced, real estate costs slashed, and the exchange rate more competitive, Britain would be well-placed to compete with the Americas, the Far East, Middle East, and Africa – most of which are growing much faster than the EU.

Summary

Following Brexit there would obviously be short-term pain for all but if you take a longer-term view our future outside of the EU seems a lot brighter than in. In the long-term wealth would be spread more equally across all regions of the UK, rather than concentrated on Londoners and the very rich.

As we have said before, it is unlikely that big business would leave the UK in any meaningful way (despite what the papers currently say) and indeed, leaving the EU, might make us a better investment opportunity for other markets, like the USA.

In short, if you want to protect your short-term investment then staying in Europe seems like the option for you. If, however, you are prepared to take a longer-term, more altruistic view, then the 23rd June might be your opportunity to ‘get out of dodge’.

Whatever option you choose it is clear that it is a decision not to be taken lightly. As a nation we will never get this opportunity to shape the face of this country to such an extent again, so our advice is to go to the polls with a clear idea of what you are signing up for.

Have your say – British medals to be made in France, but is is right?

medalThe manufacture of some British medals is to be off-shored to France according to reports this morning. This will be the first time that any top British honour has been manufactured abroad and the news has apparently provoked anger.

It is understood that the CBE medal, the Distinguished Service Order, The Order of the Bath, the Order of St Michael and The Order of St George are amongst those to now be made in France. Arthus-Bertrand, the company set to make the awards, was founded in Paris in 1803, 12 years before Napoleons defeat at Waterloo, and even supplied medals for campaigns against Britain. Arthus-Bertrand has been named on a shortlist with seven British businesses following a tendering process by the Crown Commercial Service. British medal makers criticised the move, blaming the European Union and its tendering rules.

Both the Telegraph and the Daily Mail have focused, this morning, on the uproar from our own military veterans, the later quoting one saying “Can you imagine the French allowing the Légion d’honneur to be made in Germany? When this country awards medals to its soldiers, sailors, airmen and citizens they should be made in the UK.”

It certainly is hard to conceive of a point in time where the French, regardless of EU tending rules, would consider the manufacture of their top honours abroad, but does it really matter?

What do you think about this news? Are the papers this morning making a big fuss about nothing? Does it really matter where a bit of metal is made, surely it is more about recognising the acts of the recipient?

Use our poll and comment below.

Do you think that it is fine for British medals to be made overseas?

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Hornby on brink of collapse – A warning to other manufacturers

hornby-ENDOFTHELINE

Following a 3rd profit warning in just 5 months Hornby’s chief executive, Richard Ames, has quit the ailing British firm. Is this the end for one of Britain’s best loved manufacturers and can anything be learnt from their current situation?

Hornby, which also makes Airfix kits, Corgi cars and Scalextric, have produced children’s toys since the early part of the 20th century. Until the 1999 they produced most of their product lines in the UK but subsequently moved all of their manufacturing to China. It would seem that, despite desperate attempts to move some production back in 2012, it is the unreliability of their Chinese manufactures that is set to toll the death knell for Hornby. The irony of this will be in the event that Hornby does go under, I would be willing to bet that it will be the Chinese that buy it!

Hornby have struggled to consistently get its products out of China and into European stores for the last few years, despite going to the length of changing Chinese factories in 2014. These stories of businesses struggling to get stock out of China are not new to us. We have heard from business owners of, start-ups specifically, that were lured to China by the promise of low unit prices only to be hit by low quality or delayed stock. Such delays can have devastating effects for fledgling businesses and, as we can see in the case of Hornby, more established companies too.

Another downfall to Chinese manufacturing, particularly, is the potential threats against  intellectual property. Again, we have heard first-hand from businesses that have produced in China only to find knock-off’s being produced in the very same factory utilising their innovations. What is more, there is very little you can do about it.

We are not saying that anything produced in China is bad. In fact, it can, and does work very well for some businesses. But, if you are thinking about producing abroad, don’t say that you have not been warned of the dangers and made effort to protect yourself.

As for Hornby, James May, the Top Gear presenter, has recently attempted to encourage his followers to buy a Hornby train set to save the company. We would say that you perhaps opt for one of their Quickbuild kits made at the Plastech factory in Sussex instead.

Kick Start a new Wardrobe with some British made bargins

Patrick-Grant_2823424b

Celebrity tailor Patrick Grant, of The Great British Sewing Bee, has launched a not-for-profit clothing initiative to support British manufacturers that is offering some real must-have bargains. Grant has recently set up Kickstarter fund inviting the public to pledge their support by placing advance orders for some British made essentials, including jeans at just £49.

The Community Clothing collection features three key items for men and women: a five-pocket jean priced at £49, a classic Harrington jacket priced at £79 and a single-breasted raincoat priced at £119.

The clothing will be made in Blackburn at the Cookson and Clegg factory (which Grant saved from closure last year. However, the garments will also source their suppliers for things like buttons and labels from other UK factories.

Community Collection - Rain Coat

Community Collection – Rain Coat

Engineered for simplicity and selling direct to the consumer, Grant hopes to keep the prices low, especially when compared to most other labels sporting the ‘Made in Britain’ logo. He hopes to raise £75,000 through order via Kickstarter and manufacturing will begin in March with delivery expected in July.

I have just pledge to buy a pair of jeans and a raincoat. Once I recieve these in the Summer expect an extensive review from us.

Click here to grab yourself some british made bargins… we have!

61% of UK manufacturing firms foreign owned

untitledNearly two thirds of UK manufacturing businesses that employ over 500 are now owned by foreign companies claims business minister Baroness Neville-Rolfe.

She went on to say that 320 manufacturing enterprises in the UK, with more than 500 employees, were now in a situation of having over 50% of their shares in foreign hands.

It is clear that foreign investors see the potential of British manufacturing, who are hoovering (or should I say Dyson-ing) up some of our most treasured brands. What is perhaps even sadder than the headline of this article is that in many cases these ‘Jonny-foreigners’ seem to actually do a better job that us at running them. Take for instance Jaguar Land Rover. Once failing under British ownership, JLR have seen production triple since under the ownership of the Indian’s.

Do these stats perhaps highlight another issues – that we might have lost the ability to run a business properly? Have we Brits lost our once envied entrepreneurial spirit? Whatever the reason it certainly must indicate that the system is broken somewhere!

What do you make of this news? Please comment below.

JLR take pole position as the UK’s biggest vehicle manufacturer

Land-RoverWith more than 500,000 cars rolling off the production lines at its three British plants in 2015, Jaguar Land Rover have now taken over Nissan as the UK’s largest vehicle manufacturer. This is due to the firm having almost trebled production since 2009.

However, JLR do not want to stop there. The West-Midlands’ based company are planning a further £450m of investment at their i54 site, on the border of Wolverhampton and South Staffordshire, which is expected to double production. JLR has also doubled its workforce to 35,000 over five years and so are one of the Midlands main employers.

This is obviously hearting news to the people of the area and a positive message from our manufacturing sector as a whole.

Further stats reveal that almost 1.6 million cars were built in the UK in 2015, an increase of 3.9% over the previous year, reported the Society of Motor Manufacturers and Traders (SMMT).

Nearly four out of five cars were exported, up by 2.7% on 2014, despite a huge fall in sales to China and Russia.

Will manufactures leave the UK if we Brexit?

BrexitOne of the chief arguments used by the pro-European Union lobby has been that in the situation that the UK leaves the EU then as many as one in then jobs will be lost, leaving our manufacturing sector decimated and our economy in tatters.  This is as many of 3.5 million jobs in total. But how likely is this apocalyptic future view to become a reality?

According to analysis published earlier this month, just eleven global engineering firms with sites in the UK provide Britain. This handful of firms provide around 90,000 of those jobs and, of course, support hundreds of thousands of secondary jobs. Thankfully, the CEOs of those eleven firms have each posted their colours to their respective masts in recent years. In turn they have all made a clear commitment to keeping their business within the UK even in the event that the British people opt to leave the EU, allocating millions of pounds of investment to plants in the UK.

Toyota, General Motors, BMW, Volkswagen, Airbus, Jaguar Land Rover, Nissan, Honda, Geely and Ford have all stated  thier ongoing committment to UK manufacturing, whatever the result of the anticipated referendum.

With the referendum on Britain’s membership of the European Union looming, this apocalyptic view, presented by the pro-EU lobby seems to be becoming increasingly central to their arguments. However, given the facts of the matter it would seem that such an argument is unlikely to hold any weight. In short, if you’re worried about businesses and job creators leaving Britain after Brexit, don’t be. They won’t.

 

For those interested here is a summary of each of these large engineering firm’s positions:

• Toyota, the world’s largest car manufacturer, has announced it would remain in the UK following Brexit, the CEO Akio Toyoda told the Financial Times,“we want to deliver even better cars, so when that capsule is opened after 100 years, all can see we’ve built a truly British company.” Toyota employs 4,000 at its car plant in Burnaston and engine plant in North Wales.

• General Motors-owned Vauxhall/Opel CEO Karl-Thomas Neumann has said, “We have plants in Luton and Ellesmere Port. We will not turn our backs on England, life would carry on. We would continue to find ways to invest.” An Opel plant in Germany closed last year while GM invested £185m in its UK van manufacturing facility. Vauxhall employs 4,500 people in its two plants, plus a further 23,000 in its retail and UK supply chain (not included in overall figures).

• BMW-owned Mini announced a £250m investment in 2012 at its three UK plants to increase production, having announced an additional £500m for the latest Mini only the year before. Mini employs 5,600 people in Oxford, Swindon and Hams Hall, and is one of the UK’s most productive manufacturers in the UK.

• BMW-owned Rolls Royce Motor Cars has dismissed the idea of relocating outside the UK. BMW CEO Torsten Mueller-Oetvoes told Reuters, “I’ve had lots of questions in my time in a way of why aren’t you opening up a plant somewhere else. I sad guys are you kidding me? This is so truly British that it belongs to Britain and it is also part of our success story that we are from Britain.” Rolls Royce directly employs more than 21,300 people in the UK, including over 12,000 at its Derby site, home to its Civil Aerospace and Submarine businesses as well as its car manufacturing business. Other key locations include Bristol, East Kilbride, Ansty, Barnoldswick, Inchinnan, Hucknall and Sunderland.

• Volkswagen-owned Bentley is committed to the UK. Board member for sales, Kevin Rose, has said, “We made our plans, we’ve announced the investments… and they were in full knowledge that there was a referendum so we believe in the UK” Bentley is the third largest automotive R&D investor in the UK, employing 3,600 people at its Pyms Lane site.

• Airbus has corrected claims it would cease investment in the UK. Airbus CEO Fabrice Brégier said at the Paris Airshow he had “no intention” of pulling out in the event of Brexit. More than 4,000 people, including 2,000 engineers are employed at its Filton site.

• Jaguar Land Rover announced in March 2015 an investment of £600m in the west midlands including £400 for manufacturing the new Jaguar XF at Castle Bromwich and in September a further £120m in its Solihull plant – all despite the Brexit referendum being likely. Jaguar Land Rover, the country’s largest automotive business, has its headquarters in the UK and employs 25,000 of its 26,000 strong workforce within the UK, across five sites.

• Nissan announced in 2015 it would build its next generation Juke vehicle at its Sunderland plant in the UK, with £100m investment allocated. Nissan Chairman Paul Willcox said, “Nissan, obviously, is a global company. We export to over a hundred different countries from our production plant in Sunderland … the important point is not that referendum and the decision, whichever way that goes. Nissan had made a strong commitment to the UK so that won’t be pushed to one side, we have made that commitment, certainly beyond 2020.” Nissan employs a 6,700-strong workforce in Sunderland, many of whom are ex-miners and ship builders.

• Honda announced in 2015 a record £200m investment at Swindon – its only European factory – to produce a new five-door hatchback that would create a global manufacturing hub that would build a new five-door Civic. Honda employs around 3,400 people at its plant in Swindon
• Geely, the Chinese owner of the London Taxi Company has announced an investment of £250m to build a new Coventry plant creating 1,000 jobs to build a low-emission black cab.

• Ford announced in 2014 that it would invest £190m in Dagenham, and in 2015 a further £181m in its Bridgend engine manufacturing plant even though a Brexit referendum was on the cards. Ford employs 13,000 people in the UK.

British Cotton Mills to Spin Once More

SBR_MEN_011215Cotton2_01By the mid 1980’s the last of the UK cotton mills was closed. It was assumed that cotton production would never return to the UK in the wake of cheaper foreign imports. However, thanks to £4.8m investment by a North West based company, the first cotton in a generation will be once again produced in Manchester.

English Fine Cottons is intending to create more than 100 new jobs by regenerating a former Victorian cotton mill and use cutting-edge technology to produce luxury yarn for domestic and global markets. The company has already placed orders for key equipment and begun recruiting staff with a view to re-starting cotton spinning in the UK mid-2016.

The new mill, it is claimed, will spin some of the most luxurious yarn in the world, using raw materials from Barbados, India, the USA and Egypt. The yarn will be used in collections for the high-end fashion market and ride on the tide of desire for Made in Britain fashions.

 

 

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