Should policy makers continue to advocate “rebalancing” the economy by exporting?

September 2, 2014

sarah oconnor ft economicsSarah O’Connor, economics correspondent of the FT, reports Lloyds Bank’s findings that 58% of the 200 midsized companies surveyed (annual revenues between £25m and £750m) said the UK was their top priority and were not reliant on exporting. Just 7% planned to enter overseas markets in the next five years.

Obstacles named by companies include volatile exchange rates and a range of different legal and regulatory regimes.

Policy makers advocate “rebalancing” the economy towards exports and away from a reliance on domestic demand. Tim Hinton, Lloyds’ managing director for small and medium business banking, said midsized companies were “overlooking the benefits” of exporting. Businesses are focusing their efforts on their UK operations first, looking to reduce their costs and increase productivity before embarking on global growth opportunities” and UK manufacturing grew 0.9% in the third quarter, ahead of services at 0.7%.

The government and the Bank of England want to see the UK economy reduce its trade deficit – perhaps they should encourage import substitution which would also boost domestic manufacturing.

Another FT article agrees that the economy remains lopsided and too reliant on domestic consumption, disappointing policy makers who had hoped for an export-led recovery: “The trade in goods deficit rose from £9.1bn in May to £9.4bn in June as exports fell more steeply than imports. The overall trade deficit – which takes into account the UK’s services surplus – rose from £2.4bn to £2.5bn”.

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The IMF’s opinion: sterling is somewhat overvalued and its recommendation for manufacturing is to increase immigrant labour . . . no thought of educating and training our own unemployed.

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H.T. Brigham in Coleshill expands and still finds time to maintain a remarkable blog

August 22, 2014

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Two years ago news of H.T.Brigham was presented on this site. Since 1947 this company has supplied metal presswork and metal stamping to home and global markets in several sectors, including the automotive, construction, medical and gas industries.

We read on the Made in the Midlands website that as part of an on-going investment programme they have just installed a fully reconditioned Cincinnati HME 150 ton power press to assist with an increasing number of orders requiring finishing/secondary operations.

Apprenticeship

There is an interesting blog on their website. One post is about manufacturing and engineering sector’s growing skills gap. HT Brigham particularly needs young toolmakers.to augment their ‘aging and decreasing skills pool’. Apprenticeship schemes have long been an effective method of recruiting and nurturing engineering talent but there are risks, especially for smaller businesses. The low minimum wage of £2.68 per hour (though like HT Brigham, many companies will choose to pay more) apprenticeship grants and local jobs fund initiatives, can make this an appealing option financially.

However, with most apprenticeship programmes combining shop-floor and college based training for an average of 3 years, there is a significant long-term commitment on the employer’s part. Colleagues will need commitment and patience to nurture the individual through the process which may take them away from their regular duties to some degree. And after all this investment there is no guarantee that they will stay. Setting out a clear career path, continual appraisals and pay scale increments for apprentices, encourage commitment. Contractual tie-ins are another way for a company to protect its investment for a given period of time.

HT Brigham Director, Simone Thomas, wrote about the role women have to play in the manufacturing environment

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“It is crucial that we continue to nurture and inspire the next generation of women astronauts, prime ministers, athletes, board directors and more and I shall carry on in my matriarchal role of trying to lead a group of dedicated females to further success in manufacturing”. 

H.T. Brigham was founded by a husband and wife team in a garden shed, utilising one hand press and delivering the components locally in the sidecar of their motorbike.

Following Hugh Brigham’s untimely death, Margaret Brigham successfully took the business forward at a time when female business leaders were few and far between, especially in the manufacturing sector. She continued to do this up until her death in 1997. Ms Thomas values female colleagues at H.T. Brigham – ‘an invaluable asset to a company with loyal input and meticulous attention to detail’. She points out that though this market sector may not have an obvious appeal for women it can provide a challenging and stimulating career path for young female recruits down a variety of avenues within manufacturing.

HTB’s blog advised: Think Global Act Local

H.T. Brigham has the option of competitively sourcing many products and services on a national and international scale, but has certain requirements which will always be better satisfied by a local supplier.

The trend for sourcing from the Far East appears to be reversing. ‘Supplier response’ can be crucial, with a focus on time to market, quick turnarounds and short lead-times. A local company will take less time to deliver, at a lower logistical cost than a company which is further away. They can be more reactive to changing demands and urgent requirements, more flexible with batch sizes and delivery schedules and can quickly address any problems.

The benefits of having a localised supply chain, competitive on price or quality, can be considerable and with over 70% of its suppliers based in the West Midlands area, HTB is taking full advantage of the region’s skill base.


Turning from assembly to manufacturing – Accord Housing

September 18, 2013

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On a sister site in August 2011 we recorded that social housing landlord Accord Group had bought a derelict Walsall factory on a five acre site. It planned to manufacture low-carbon timber houses there, which it had previously imported from Norway, for use in three of their developments.

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Accord’s timber housing in Redditch

Mike Dell, president of Black Country Chamber of Commerce pointed out, in the Birmingham Post, that “Energy bills for these homes, which are nationally acclaimed, cost on average 50% less than traditionally-built properties of the same size. This sort of saving is a tremendous help to people who are struggling with the current cost of living in the tough economic climate”.

Alan Yates, Director of Regeneration for the Accord Group, said: “With fuel poverty a growing concern in this country it is vital that house builders think about how they can make new homes more energy efficient”.

Earlier this year, the Accord Group became the first housing association in the country to manufacture low carbon timber frame homes.

Highly energy efficient, the carbon footprint of homes produced at the factory, based in Beechdale, Walsall, will be half of what is generated when traditionally built brick homes are constructed. To meet the challenge of building higher quality homes with less Government grant, the Accord Group has developed an innovative hub which will manufacture around 200 timber homes each year.

Accord will produce timber homes for rent, shared ownership, selling some to other housing associations and developers, creating revenue to develop new housing products.

It already provides 11,000 affordable homes and services to 40,000 people across the West Midlands and beyond.

For more information go to http://accordgroup.org.uk/articles/86-Accord-become-first-housing-association-in-UK-to-open-timber-home-factory


Onshoring, SME growth and the moral of this story

August 24, 2013

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For the full article by Peter Davies, who inspired the setting up of the West Midlands Producers’ website, including a brief account of setting up his own company, go to this website.

Extracts:

Peter DaviesI grew up in post war Britain, accustomed to rationing and shortages in a period when consumer items – if available at all – were generally ‘Made in Britain’ and proudly stamped so. Growing up in the back streets of Birmingham we had little in the way of possessions but we were given a work ethic that said ‘if you can’t afford it you can’t have it’ and ‘if you’re well enough to go out you’re well enough to go to school/work’

At a Chamber of Commerce meeting some years ago Tony Blair referred to manufacturers as ‘dinosaurs’

As a SME owner for the past thirty years I have seen at first hand the fall from grace that was manufacturing. At a Chamber of Commerce meeting some years ago Tony Blair referred to manufacturers as ‘dinosaurs’ illustrating the then government view. In the past couple of years though there seems to have been a much more positive view of producers from the Coalition and it is great to see that there is a new buzz word around – onshoring! To bring back production of certain items from overseas, particularly China, will be a slow process but as there is now only a small cost advantage to producing in China this will become an option that is considered more and more.

Despite the media doom and gloom we have seen growth of around 20% year on year since the crisis of 2008, have invested heavily and look to invest more in the coming years in both plant and people. We look on the future as an exciting challenge helping British companies to manufacture their products in the UK . . .

Difficult as it is we can all play a small part by actively buying British in preference to imported goods. It might take a bit of effort but it is surprising how much we do make and how much effect we can have by being a bit selective. Often it turns out that the British product is cheaper and almost certainly better than foreign goods.

So, where I am I going with this?

I guess the first thing for Britain to do is to change the culture of ‘soft options’ whether it be in the perception that we [the UK] are a soft touch for everyone or whether it is the emphasis on ‘soft’ business. At long last Government seems to be recognising that manufacturing is essential to wealth.

If there is a moral to this story it is that, even today, there are opportunities for anyone to be good at what they do. If you are a road sweeper, be proud to have the cleanest street in town; if you are a bus driver be the smoothest driver, the friendliest face, if you are a businessman [or woman] be the most honourable and ethical person you can, in other words always give of your absolute best. The mind set of ‘take’ has to stop in the Britain of today. With the lead of Government, parents and educators we need to encourage work as a norm not an exception, not everyone can be a pop star or a premiership footballer but an approach of giving of your best rather than a shallow ‘take what you can’ attitude must be good for the individual, their employer and eventually for Britain. In particular, there is a bright future for anyone who is prepared to go into 21st Century manufacturing. It may not be overly glamorous but can always be interesting and challenging and sometimes very rewarding.


Wedgwood, Portmeirion and other Stoke-on-Trent potteries regain ground

April 28, 2013

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Wedgwood (Stoke-on-Trent) is one of the manufacturers in the Potteries region now reporting a modest return to growth – after years of struggling to compete against cheap Asian imports. Some of the surviving companies developed clays that require less firing – thus reducing the potters’ energy bills – or worked with Ceram, a Stoke-based research organisation, to increase production efficiencies.

John Murray Brown reports in the Financial Times that data from the Office for National Statistics show that the sector was worth £430m in 2012, a rise of 20% on four years earlier – a number of the leading brands reporting record sales and expansion plans.

portmeirion potteryPortmeirion Potteries bought Spode and Royal Worcester out of administration in 2009, moved some of the production of its Spode Blue Italian range back from China and is employing about 400 people at its plant in Stoke.

steeliteSteelite of Stoke, the UK’s largest tableware manufacturer has acquired Royal Crown Derby, as part of a £12m investment programme embarked on last year with support from the government’s regional growth fund, which is providing £2m.

Last year Kevin Oakes, chief executive of Steelite, expressed concern about the dumping of below-cost product from China in the European market, which is currently the subject of an EU investigation, seeing a correlation between the jobs the industry has lost and the volume of Chinese imports.

West Midlands MEP Phillip Bennion, whose work in this sector was featured on this site last year, has continued to liaise with Kevin Oakes and other ceramics manufacturers. Earlier this month, he announced at the European Parliament in Strasbourg:

“It seems that after sustained lobbying, we have persuaded a majority of EU governments to back the Commission that we must confirm action to stop unfair competition in kitchen and tableware.

The Commission has yet to formally publish a proposal and Council then has to adopt it before the expiry on 15th May but the Council vote is expected to be a formality, approving the deal agreed in the anti-dumping committee.

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A Meriden Food Producer

March 20, 2013

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Many people visited this site when the news about Heart of England Fine Foods was published. We hope the interest will extend to news of a Meriden food producer.

Approach to Rock Farm

Approach to Rock Farm

As there has been no fair trade price for pig farmers, and feed costs had doubled, fourth generation farmer Rick Taylor decided to leave this unprofitable business and use some land at Rock Farm in Meriden to grow salad crops.

Polytunnels are not regarded as beautiful, but – as climate becomes more unpredictable – there might well be increased use of these micro-climates if we are to encourage local food and reduce imports. As people are advised to buy British and climate change poses problems with drought and flooding, growing food in polytunnels will become more common. Some grow vegetables and salads using hydroponics, feeding plants with liquid nutrients.

The only British tomatoes found on sale out of season are from Thanet Earth polytunnels in Kent. They have a very good flavour and are a welcome option instead of Spanish and Dutch imports.

polytunnels interiorGrowing in just under an acre, Charles Dowding makes £30,000 a year selling salad leaves to local customers within a 4 mile radius of his farm.

Objections were made to the Rock Farm development on safety, parking, environmental and aesthetic grounds and concern was voiced about the impact on water pressure, but Knowle and Bickenhill councillors voiced their support for the application and their desire to help the farming industry.

Mr Taylor has now been granted permission (conditional approval) to erect two polytunnels and ancillary irrigation-related buildings, which will be screened from Back Lane and the adjacent public footpath by landscaping including native trees and shrubs.

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Look out for Rock Farm Salads when shopping next year!

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Six months EC fair trade measure for West Midlands ceramics manufacturers

November 19, 2012

The Telegraph reports that retailers and importers in Britain, who opposed a fair deal for producers in the dairy sector, now oppose anti-dumping* measures in the ceramics industry.

In October, West Midlands MEP Phil Bennion met a delegation of ceramics manufacturers in Stoke on Trent, including Kevin Oakes, CEO of Steelite International and representatives from Johnson’s ceramic tiles and Dudsons. He then lobbied for the EC to impose provisional anti-dumping duties on imports of ceramic tableware and kitchenware from China, which is now the biggest manufacturer of household ceramic goods in the world.

The ceramics firms claimed that that huge quantities of cheap Chinese products were being sold in the EU at artificially low prices and this was confirmed during a nine-month Commission investigation.

During Adrian Goldberg’s WM Radio programme today it was pointed out that high tariffs are imposed by the Chinese on imported goods & calls were made for a level playing field.

EC duties have now been imposed, ranging from 17.6% to 31.2% for Chinese companies that co-operated with the investigation and 58.8% duty on all other Chinese firms exporting cups, plates, saucers and other tableware and kitchenware into Britain and the EU.

These measures will also benefit newcomers to the industry such as flux, a firm designing and manufacturing ceramics, set up in 2010 by Professor David Sanderson and students at Staffordshire University.

Phil Bennion said:

“The evidence is overwhelming, China has been flooding the European market with goods at an artificially low price, in a way calculated to destroy European ceramics producers . . . “There will be a small rise in the price of Chinese tableware in the shops as a result but this only corrects the unfairly low price the goods were being sold at, which would only last until most EU manufacturers had either gone bankrupt or been taken over by Chinese companies.

“But it is only a provisional move. The Council of Ministers of member states has six months to decide to confirm the anti-dumping measures and extend them up to five years. If the Council of Ministers refuses to back the move, the extra tariffs will have to be repaid to Chinese manufacturers. That would be a travesty, it is quite clear to me that World Trade Organisation rules on illegal dumping have been broken”.

The decision notice which recorded the investigation in detail, noted a lack of basic accounting records and found clear evidence that the dumped imports from China intensified the effect of the economic downturn and that the Union industry has been unable to recover and regain significant sales volumes and market share throughout the period considered.

Phil Bennion’s account may be read here: http://philbennion.org/en/article/2012/631088/victory-for-potteries-ceramics-firms-and-mep-as-eu-slaps-anti-dumping-duty-on-chinese-tableware

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*Dumping: a form of predatory pricing – selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. It is legal under World Trade Organization rules unless the foreign country can reliably show the negative effects of the exporting firm on the domestic producers.
Read more: http://www.investopedia.com/terms/d/dumping.asp#ixzz2CehAb7Wk