Russell Luckock, chairman of Birmingham-based pressworks company AE Harris, talks to West Midland manufacturers about the state of their industry
During the past few weeks I have visited 15 shows at the NEC, all with sections devoted to the manufacturing capabilities of UK companies. From GLASSEX, through SUBCOM and MACH 2008, I spent time visiting stands and talking to organisations who make products in the UK. I wanted to find out their views of the state of industry.
The results were fascinating. All the exhibitors were survivors, weathering some of the toughest conditions since the 1930s. With vast quantities of manufactured goods sourced overseas, factories have had to drastically reduce staffing levels and cut costs. Valuable skills have been lost, which will have a marked effect on the ability of companies to compete.
Nearly all the firms felt the reduction in interest rates was unwise and sent the wrong message. It will not reduce costs, as in many cases they have had to pay for dearer money over the last three months.
A view repeatedly expressed was if the Government wanted to see more money in the high street, why deprive those who live to a certain extent on savings? Pensioners for instance, who, until somebody devises pockets in shrouds, are more likely to spend their money than keep it in saving accounts.
The general view was rate reductions would see an increase in inflation. On the published scales of inflation, there was widespread derision of the Government's preferred measure, the Consumer Price Index (CPI). Nevertheless, this country's inflation rate is very low compared with Europe and the US, and many felt keeping it down was absolutely vital if firms were to remain competitive.
Almost all companies stressed the UK is becoming more competitive by the day. The low inflation rate, with the strength of the euro and weakness of the dollar, is assisting exports. When compared to the double digit price increases demanded by Far Eastern suppliers, buyers in this country are once again looking at home-produced goods.
I have just returned from Ireland where manufacturing companies are suffering, with a major player in the automotive world, Iralco, which employs 600, going into administration.
A stay of execution for six months has been negotiated but factories in the Emerald Isle are finding they are uncompetitive when trying to win orders from British companies. Mike Browne, of Fabricated Products, Shannon, stressed the difficulties of trying to retain UK customers, whilst coping with rocketing material prices.
Carl Jackson, of Springmasters, Redditch, conceded his workshops were very busy, the low rate of inflation helping. He joined John Daly, of machine tooling firm Foremost Machinery Services, Atherstone, in deploring the way Government found billions to assist the Financial Services industry, yet left the lifeblood of the country, manufacturers, relatively small change.
John Marshall, of Tamworth-based hinge maker Gold & Wassall, adopted a similar view, pointing out the reductions in red tape promised by successive Chancellors had yet to reduce his workload. Like many others, he felt banks and financial houses should be left to sort their own problems. Their highly paid directors got themselves into this mess, why should the taxpayer bail them out?
Graham Durnall, of Albion Springs, West Bromwich, told me 60 per cent of his company's output was exported, and it was looking to make further inroads abroad.
Chris Ferrar, of MSP Turned Parts, Coleshill, a company that only exhibits every two years at MACH - the only show they attend - was also upbeat about his order book and scathing at the way the financial services were so generously treated.
Martin Beckwith, of glass company Chas-mood of Havant, Hants, highlighted an interesting point. His company has been purchasing stainless steel components from Germany for 20 years due to the quality but his suppliers are now demanding a price hike of more than 20 per cent compared with twelve months ago. He was therefore starting to evaluate British sup-pliers.
This view was echoed by many others selling finished products. Such news is more than welcome to component manufacturers, and yet another reason for keeping British inflation low.
The International Monetary Fund is warning there is a one-in-four chance of a global recession. Its forecasts for twelve months cite the euro as overvalued, whilst the Chinese renminbi is undervalued. If the latter currency rises, as is widely expected, this will create greater opportunities for UK factories.
Companies were by and large optimistic. The turned part organisations were upbeat, reporting an increase in enquiries and orders. This would support Treasury predications for a growth rate of 1.75 to 2.25 per cent, against an IMF forecast of 1.6 per cent for Great Britain.
British suppliers are winning the quality battle, especially in consistency. Although Far Eastern prices are competitive, due to low wages, the quality over the medium/long term left many question marks. By ruthlessly keeping on top of checking and rechecking goods before they leave the factory, UK suppliers are, at times, winning orders at a premium. A faulty product can be very expensive, and with long lines of communication, time consuming.
Show visiting tells me there is a future for the British manufacturer. To remain competitive is a must, and all the newest plant and equipment was on display at MACH 2008 exhibition.