Category: Manufacturing

Manufacturing ‘missing a generation of apprentices’

There is mild optimism among staff in West Midlands after a rise in output but elsewhere chances of getting work look remote

It is a measure of returning confidence to the fortunes of BSA Machine Tools that four apprentices have been taken on over the past two years, bringing the full-time UK staff up to a total of 38. Given that in the 1960s the parent companies that became BSA Machine Tools employed about 14,000 people, this represents a very small step upwards after decades of decline. Nevertheless, staff here are inclined to be cautiously positive.

Steve Brittan, managing director at the company, which makes machine tools for the aerospace, defence, oil and automotive industries – 90% for export, feels there is a new confidence in the economy and is tentatively reaping the dividends of an export-led recovery.

He welcomed the chancellor’s vision of a Britain that makes things again, though he recognises that for his business to be successful its high-end UK headquarters will continue to be supplemented with much of its work being outsourced to more low-tech partner enterprises in China and Taiwan.

The mild optimism felt by staff here echoes the wider excitement about the surge in exports from West Midlands to China and the rapid expansion of nearby Jaguar Land Rover, which is employing thousands of new workers. But the confidence is felt in isolated pockets and has not filtered through to much of the local area, the parliamentary constituency of Hodge Hill, south Birmingham, which still has the highest level of youth unemployment and the second highest overall unemployment in the country.

Liam Byrne, Labour MP for the constituency, said many of the new jobs that had recently been created were part time, zero-hours contracts. While he welcomed signs of recovery in West Midlands manufacturing, he noted: “The flipside of that is that this new wealth is not widely shared. It sits alongside deeply entrenched poverty.”

BSA Machine Tools’ headquarters have shrunk from the vast expanse they occupied until the 1980s, with land sold to make car parks and a large bingo hall (where managers will be celebrating the chancellor’s decision to halve bingo duties to 10%), and now occupy a long narrow warehouse, where mainly elderly staff are working on three £1.7m machines for export, and are preparing to start work on a £1.1m order for two more machines that will be exported to Mexico for fracking.

“It is small beer,” he says of his modest employee expansion, but he believes the government is genuine in its commitment to supporting manufacturing. In the past year he has had breakfast with David Cameron in Downing Street, to explain the needs of manufacturers exporting abroad, and has given Vince Cable lunch and a tour of the Birmingham headquarters.

The announcement of a focus on cutting energy costs, given US industrial energy prices are half those in Britain, is welcome, since this is an issue Brittan cites as a significant obstacle to being competitive. “I think they recognise the problems caused to manufacturing by 30 years of progressive dismantling by various governments, and that’s encouraging,” he said.

The decades-long decline in manufacturing is evident on the shop floor, where there is a noticeable gulf in ages between the majority of staff and new recruits: 70% of employees are over 60, a high percentage are over 65 and three are over 70. One older staff member is instructing a new electrical apprentice, pointing out important aspects of a piece of equipment with his grey hospital crutch.

“I hope these guys will hang on in there while the apprentices come through,” Brittan said. With the decline in profitability of UK manufacturing the company shrank and stopped employing new apprentices. “It’s a microcosm of what has happened in the UK manufacturing industry and the way it has been treated.”

He thinks a corner was turned about three years ago when the value of the pound dropped, making British exports more attractive globally, and when the government began making more positive commitments to the manufacturing sector. As well as the core team in Birmingham, the company contracts in a further 800 staff in China when orders require them.

Increased willingness from banks to lend to the business over the past year and the confidence given by assurances of continued low interest rates from the governor of the Bank of England have also helped the business begin to feel more secure about its future, he said.

Andrew Manning, 25, one of the new apprentices who joined two years ago when the company took on a handful of big orders to make machines for the US oil industry, said: “There is a missing generation in terms of apprentices – we’re having to learn from the blokes who are about to retire, and they’re having to hold on until we learn more.”

He is thrilled to be in work, particularly given the bleak employment statistics in the local area, but life remains complicated even when you are working. Because he is older than the other apprentices, he earns more than the standard £5 an hour but still finds the rising cost of living in Birmingham, ever increasing rents and soaring bills a struggle and is conscious that the prospect of buying somewhere to live remains remote.

A mile from the headquarters in the offices of a community centre, the Hub, which works with marginalised young people offering free access to the internet and support with looking for work, staff do not believe the people they support are feeling the effects of a recovery. The Firs and Bromford estate sits on the other side of the M6 from the Jaguar Land Rover site, but the charity has yet to help anyone find work there.

“We’re not in Cornwall where there are no jobs, but there is a disconnect,” said Paul Wright, branch director of Worth Unlimited, the charity that oversees the centre. Although the car manufacturing plant was visible from the windows of the estate’s tower blocks, locals felt finding work there was only a remote possibility.

This area is in the top 1% most deprived wards in England. Statistically “it has all the highs that you wouldn’t want to be high and all the lows that you wouldn’t want low: high unemployment, high deprivation, social exclusion; low educational attainment, levels of skills”, Wright said.

“All those statistics are there. People here do have talents and skills, the willingness to work, but there are problems with access to jobs. We see the Range Rover success story, and they are taking on people – but the jobs that tend to be available are agency, zero hour, night shifts, with no long-term security.”

He conceded that: “If you look hard, there are some positive signs,” and described the happy case of a 30-year-old man who had been unemployed for a long time and recently got a job with Land Rover, at a different site, a bit further away. His success is used to try to inspire other job-seekers who come in looking for work.

“It does help to be able to tell people about this person who got a job. There’s nothing more inspiring than that,” he said, but he conceded that this job too was a short-term placement through an agency, on a zero hour contract, night shifts, and with no long-term security.

“Technically he doesn’t actually work for Land Rover because he is contracted through an agency. Still, in this climate he is a success story. That’s why we’re celebrating him.”

[The Guardian]

Manufacturing companies are expected to be major player

Manufacturing firms are expected to feature prominently in an influential list which celebrates the pace-setters in Yorkshire’s businesscommunity.

The Yorkshire Fastest 50, organised by the Yorkshire Post in association with law firm Ward Hadaway, has been highlighting and celebrating the fastest growing companies across the region since 2011.

In the build-up to the 2014 Yorkshire Fastest 50 awards, analysis of previous years has revealed the growing influence of manufacturers and engineers.

The inaugural awards in 2011 saw seven companies from the manufacturing and engineering sector make the list, which ranks profit-making businesses according to their rate of annual turnover growth. Those businesses accounted for a total of just over £140m in turnover in the 2011 rankings.

In 2012, there were eight manufacturing and engineering companies accounting for £176.7m of total turnover and last year, there were 10 companies from that sector in the final 50, producing a total turnover of £191.6m.

The sector also provided one of the three award winners in 2013 with Magma Ceramics and Catalysts named as the Fastest Growing Medium Sized Company.

The Dewsbury-based company makes ceramics and catalysts for a range of industrial applications and has customers across the world, as well as manufacturing operations in Brazil and Vietnam.

The full A to Z list of the 2014 Yorkshire Fastest 50, along with information on their activities, will be revealed in the Yorkshire Post next month.

Awards will then be handed out to the fastest growing small, medium and largebusinesses at an awards ceremony in March, with one of those three winners also being crowned Yorkshire’s overall fastest growing business.

[Yorkshire Post]

Manufacturing has a crucial role in recovery

Manufacturers in Yorkshire and the Humber have a vital role to play in ensuring the UK economy moves up into the next gear, according to one of Royal Bank of Scotland’s senior economists.

David Fenton said that although there are signs of recovery, the national and regional economy is “only really in about third gear just now”. Speaking to the Yorkshire Post, he said: “To get up into fourth gear, fifth gear, we really need exports growth to kick in. Clearly, to achieve that there’s a key role for the manufacturing sector.”

Mr Fenton said that the UK economy is seeing a fairly broad-based recovery across a range of sectors.

“So far a lot of improvement has come from consumer spending, which is important and welcome because consumer spending accounts for about two thirds of the UK economy… it’s vitally important to the economy that we see that recovery.

“But there are limits to how much more momentum we’re going to see from the consumer sector and obviously we know that fiscal austerity still has a good few more years left so really that leaves exports and investment, we think, as the two things that can take the recovery up to the next level,” said Mr Fenton.

But he said: “What we typically find is that investment tends to lag the recovery as companies wait, hold back and make sure the recovery is for real, so that’s why we’re stressing the importance of exports as the area of demand that we think is the best contender to really take the recovery.”

The vast majority of companies in Yorkshire and North Linconshire do not sell their goods or services overseas, according to the latest Close Brothers Business Barometer. Ninety four per cent of local businesses polled in the quarterly survey of small and medium-sized enterprises, SMEs, across the UK, said they did not export.

The main reasons provided for not pursuing opportunities abroad were cash flow concerns and that businesses think they have nothing to export.

“SMEs must be more active in seeking and exploiting opportunities overseas. Even companies that are well positioned to export often do not,” said Mike Randall, CEO of Close Brothers Asset Finance.

“We need to understand the barriers – perceived or otherwise, take measures to lower those barriers for local businesses, and make exporting a possibility for them once again.” Meanwhile, Capital Economics recently predicted that Yorkshire’s future prosperity rests on support services and the professions as manufacturing and financial services dwindle over the decade.

The research, carried out for the Yorkshire Post, predicts Yorkshire’s manufacturing workforce will shrink from 265,000 this year to 231,000 in 2020 because the region’s factories have failed to specialise in the out-performing automotive and aerospace sec- tors.

Mr Fenton said: “Manufacturing sector accounts for 15 per cent of the West Yorkshire economy compared to just 11 per cent for the UK as a whole so it’s even more important in terms of looking at the performance of the manufacturing sector in West Yorkshire given that the sector is somewhat more prominent than this part of the world.”

Asked about the economic picture in Yorkshire in comparison to the rest of the UK, Mr Fenton said: “We are probably seeing a recovery taking hold in Yorkshire and the Humber as well, albeit some analysis we’ve done does suggest that Yorkshire and the Humber isn’t quite as competitive as some other regions in the UK economy which might at the margin have shaded it down ever so slightly, but it is overwhelmingly quite a positive story.”

During a visit to Hull and Leeds recently, he said he received positive feedback from customers.

“I was pleased to discover when I was speaking with customers in Hull and in Leeds that what they were seeing matched what we were seeing in the data which is that things are a lot better than they were six months ago, and an awful lot better than they were 12 months ago,” said Mr Fenton.

Region in front on global path

EXPORTS from Yorkshire and the Humber climbed to a value of £4.43bn in the last quarter, up 4.5 per cent on the previous three months and boosted by the Asian and North American markets.

The figure for the three months to the end of June was up from £4.24bn for the first quarter of the year and up from £3.93bn for the same period last year.

The statistics from HM Revenue & Customs show that machinery and transport equipment, mineral fuels and chemicals are the key export commodities for Yorkshire and the Humber, with America, Germany and Holland the region’s top three export partners. Yorkshire and the Humber was the only northern region to show second quarter growth.