UK productivity – is it time to move to a four-day working week?

productivity working hours and family timeThe UK’s comparatively low productivity and how to improve it has long been a source of debate and analysis.

The ONS (Office for National Statistics) has reported a reduction in UK productivity for three successive quarters and according to the Resolution Foundation productivity is now 28% below the average rate before the 2008 financial crisis.  Yet this is a time when employment levels in the UK are the highest they have ever been.

Business productivity has traditionally been calculated by dividing average output per period by the total costs incurred (capital, energy, material, personnel) consumed in that period and is used as a determinant of efficiency.

Productivity in both national economies and individual businesses is much scrutinised by governments, business commentators and business owners as an indication of performance, efficiency and economic health.

All of this is based on the assumption that perpetual growth and competition are the cornerstones of economic health.

There are good reasons why it may be time to question some productivity assumptions

Two considerations suggest that the element of the productivity calculation based on employee hours worked and improved performance is becoming less central to the assessment.

Firstly, the nature of many workplaces from manufacturing to offices, has been changed by the growth of AI (Artificial Intelligence) and automation. This can have a potentially dramatic impact on overheads, particularly in reducing staffing levels, but it also means that the skills required from employees in the future will change dramatically.

Secondly, there has been a growing awareness that employee health, both mental and physical, is crucial to business productivity and success. There has been mounting evidence that increasing workers’ hours can result in higher staff absence rates due to ill health, not to mention increasing the chances of mistakes being made through tiredness and exhaustion.

UK employees have the longest working week compared to other workers in the European Union. But, despite the long hours, there is growing evidence that reducing hours worked can have a beneficial effect on productivity.

The TUC (Trades Union Congress) has calculated that UK full time employees worked an average of 42 hours a week in the final quarter of 2018 – almost two hours more than the EU average – but that full-time staff in Denmark are 23.5% more productive per hour than UK workers, despite working four hours fewer per week.

TUC general secretary Frances O’Grady explains: “Britain’s long hours culture is nothing to be proud of. It’s robbing workers of a decent home life and time with their loved ones. Overwork, stress and exhaustion have become the new normal.”

Based on this evidence, along with the TUC, the (NEF) New Economics Foundation has been campaigning for a reduction in weekly working time to 32 hours spread over four days without a reduction in pay.

‘Job and finish’ used to be more commonly used by firms although it has been largely replaced by hourly wages for productivity focused workers.  This has led to firms trying to get more out of workers without the incentives and sharing rewards with staff.  The productivity data would suggest this approach has failed.

There are however examples of companies that have shifted to a 4-day week including one Glasgow-based marketing company mentioned in a recent BBC article, that made the switch three years ago and reports that productivity has increased by about 30%, sickness leave is at an all-time low and there have been unexpected cost savings in that the company no longer needs to pay professional recruiters, as so many people want to work for them.

In July, new research by Henley Business School, as reported by the Independent, found that a four-day working week could save UK businesses an estimated £104bn a year and its survey of 250 companies “indicated that adopting a shorter working week could add to businesses’ bottom lines through increased staff productivity, as well as improved physical and mental health”. The Henley paper, Four Better or Four Worse, also found that nearly two thirds (64 per cent) of those who have already adopted the scheme reported improvements in staff productivity.

But crucially, the third, perhaps currently most important, reason why we should rethink our attitudes to productivity, is the effect on the environment.  The Henley research indicated that the four-day week would have a positive impact on the environment with employees estimating that they would drive 557.8 million fewer miles per week on average.

Work experience – between a rock and a hard place

work experience should be reintroducedEarlier this year the Federation of Small Businesses (FSB) called for compulsory work experience to be reintroduced for all children aged 14 to 16.

The Government ended schools’ obligation to provide compulsory work experience in 2012.

Since then, although many schools do still try to arrange some work experience, the responsibility for finding placements has rested largely on parents and pupils themselves.  In fact, according to the organisation Changing Education “Ofsted has identified that 75% of schools are failing to provide adequate work experience programmes”.

In 2015 the British Chambers of Commerce (BCC) questioned the wisdom of the 2012 decision, following a study of members that found that “most firms and education leaders believe secondary schools should offer work experience for under 16-year-olds”.

John Longworth, who was then the director general of the BCC, said: “Business and school leaders are clear – we won’t bridge the gap between the world of education and the world of work unless young people spend time in workplaces while still at school.

He may have been correct but the same BCC survey of 3,500 respondents found that just over a third did not offer any work experience.

In March 2017 the Government published its own research into the current state of work experience and among its findings were that “schools took a largely student-led approach, which placed responsibility on young people and their parents/ carers on finding a placement” with many relying on individual staff systems and contacts.

We are wearyingly familiar with the complaints from businesses about the lack of readiness for work among new recruits in their first jobs. They regularly cite specific concerns relating to the punctuality and attitude of such individuals.

In other research carried out in 2016 by the Confederation of British Industry (CBI) a quarter (27%) of employer respondents viewed involvement with schools and colleges as too onerous.

This may be why has not been easy for schools to find enough local employers willing to offer pupils work experience despite various initiatives tried over the years such as the now-defunct local county Exchanges which as NGOs sought to act as an interface between the two by taking care of the perceived bureaucracy involved.

Indeed, the Government’s Apprenticeship scheme launched in 2017 has hardly been a resounding success.

This is the background to the present situation we find ourselves in with employment levels higher than they have ever been and fewer Europeans willing to come to the UK for work as a result of the uncertainty over their status post Brexit, businesses are finding it even harder to recruit suitable employees let alone fill low-skilled jobs.

It seems young people are between a rock and a hard place when it comes to gaining work experience with schools overburdened by cash shortages, the demands of the National Curriculum and the demise of careers guidance while at the same time employers bemoan the lack of preparedness of new recruits while also seemingly unwilling to offer much practical help to improve the situation.

What is the answer?

The current state of the commercial property sector

commercial property siteWith economic uncertainty prevailing both globally and in the UK it would be no surprise if the commercial property sector was facing some difficulties.

The commercial property sector covers Community, Education, Hotel, Healthcare, Office, Retail and Industrial and it is clear from some of the statistics that the woes of retail have been acting as a drag on the sector as a whole.

Jones Lang LaSalle (JLL) provides information on property and investment opportunities and in its most recent analysis on new construction starts it revealed that they fell in the first quarter of 2019 for the first time since Q2 2017.

It reports that the ongoing uncertainty “dampened UK commercial real estate transactional activity in Q2, with investment volumes slowing to £8.9bn. This represented a 22% decline on the first half of and was the slowest first half of the year since 2013.

However, it reports, Alistair Meadows, Head of UK Capital Markets, believes that “Market fundamentals remain strong, with high levels of leasing, low vacancy rates and rental growth offering encouragement to investors. “

The Royal Institution of Chartered Surveyors (RICS) reports that in London demand for commercial property in London stayed in negative territory for the 12th quarter in a row and Capital Economics expects a weakness in investment activity is likely to extend into the rest of the year.

Aside from the obvious continuing uncertainty about the UK’s economic future outside the EU, the retail woes are likely to be a significant drag on commercial property. It is estimated that some 20% of retail landlords’ tenants are in significant financial difficulty, Many are insolvent and have embarked on restructuring via CVAs where insolvency is a prerequisite for doing a CVA. Furthermore there are indications that a lot of town centre retail space is no longer viable with landlords seeking planning permission for a change of use so property can be converted into residential units.

Finally, according to CBRE, the world’s largest commercial property services and investment company, most commercial property rents have been reducing in the first half of the year, declining by -0.2%, although it said the industrial sector was the best performing prime market, recording a capital value growth of 1.6% Quarter-on-Quarter, and a Year-on-Year of +6.8%.

One trend that may be significant in the future is the growing popularity of flexible tenancies and shorter leases rather than businesses owning and occupying large corporate buildings. This is already popular for renting for office space with Regus and WeWork growing rapidly but is likely to be used as a more flexible approach to renting light industrial and retail space.

Dream Big – Summer is time for considering a start-up

Summer holiday start-up dreamAs many as half of all workers seriously consider setting up their own business during the summer holiday according to research.

Emma Jones, founder of small business support network Enterprise Nation, said: “The combination of sun, sand, sea and downtime means we’re more relaxed and have time to contemplate what we want.”

Relaxing on a beach with time for reflection can make us aware of any dissatisfactions with our current status or job.  It is also an opportunity to think what else you might do if stuck in a rut and you want to “take back control” of your life.

But what is involved when starting up a new business?

The key is to identify a clear purpose and define the product/market mix for your business, essentially to be able to answer “why” questions. This may require research but you cannot start planning until you have a clear purpose. Turning dreams into reality is more than simply having a good idea!

To help you find your purpose, here is the link to a TED Talk, ‘Finding your Why’ by Simon Sinek.

Find your Why before you go any further with your start-up

The core of Sinek’s argument is that all successful businesses have a belief in the core proposition which in turn inspires others.

In essence, he says, people buy into a product or service out of self-interest, and this is why the self-belief of the business’ founder is crucial to its success. This explains why sometimes even the best capitalised business with the most innovative products can fail, because they fail to convey a fundamental belief, or enthusiasm, for what they are doing.

This is not about money or fame and the most successful companies, such as Apple succeeded because their founders not only believed in what they were doing but were able to persuade others that buying into that belief would in some way enhance their own lives.

So, when you are thinking of starting up a new business this is central to whether it will succeed or fail.

When is the right time to launch?

It does not really matter when but you shouldn’t do so until you have identified your “Why”.

Of course, in preparing to launch you should do research such as trialling the idea most likely with test marketing slightly different products/services with slightly different markets/customers before settling on your core proposition. Once you know what will sell you can develop a plan that might be used to raise finance or simply be used as a discipline for following so you don’t get hijacked by others who come along with other ideas such as where to spend money on promotion initiatives.

Another key decision is what type of business, you should trade as, whether as a self-employed sole trader, as a limited liability company or as a partnership with others. Each has advantages and disadvantages which will inform your decision.

Other factors might be the state of the economy, industry or annual cycles, availability of finance, people and other resources or opportunity.

It might be counter intuitive but during a recession can be a good time to set up a business since established businesses often take their eye of their customers when they switch their focus to one of survival. This is particularly true for larger businesses since they are also less agile and often unable to cope with a changing market.

In summary there is no right or wrong time to turn your start-up dream into reality providing you are prepared.

The unpredictable relationship between currency values and stock markets – August Key Indicator

Too often the assumption is made that when a country’s currency value drops its stock markets will rise as its exports become more competitive.

The current economic situation in the UK and elsewhere is an illustration of why this may be an over-simplistic assumption.

Last week ended with £Sterling at its lowest value against the US dollar for two years at $1.2162 and against the Euro at €1.0948 while at the same time the FTSE100 closed down minus 2.34% at 7407.06.

This suggests that the previous so-called assumptions are no longer valid.

In commenting on this it should be noted that the European, US, Japanese and Hong Kong stock markets also plunged.

What is causing currency values and stock market  turbulence?

The signs that both the global and UK economies are volatile and have been for some time. Evidence for this can be deduced from the monetary stimulus by Central Banks.

In May the OECD (Organisation for Economic Co-operation and Development) revised its growth forecast for the UK to 1.2% this year and 1% next year in the light of ongoing uncertainty about the future of the economy.

In June the WTO (World Trade Organisation warned that 20 new trade barriers imposed by G20 economies between mid-October and mid-May, threaten to increase uncertainty, lower investment and weaken trade growth.

By July, Moody’s, the credit rating agency, and Mark Carney, BoE (Bank of England) Governor were both warning that a new cold war in trade would have a deep effect on the world economy.

Moody’s was also predicting a recession in the UK if it crashed out of the EU without a deal in October. It followed up later in the month that this was now more likely following the outcome of the Conservative leadership contest, which resulted in a new Prime Minister, Boris Johnson.

So, what actually influences currency values? The BBC has a helpful guide to the factors that can play a part:

* Economy: Strong economies have strong currencies because other countries want to invest there;

* Savings: When UK banks raise interest rates, holding savings or investments in pounds becomes more attractive;

* Prices: If UK goods are cheaper than those abroad, they will be attractive to foreign customers who buy Sterling to purchase them. This in turn increases the exchange rate;

* Public finances: The state of a government’s bank balance, or how much debt it has, can also affect the exchange rate;

* Speculation: The exchange rate is highly vulnerable to currency speculators, who buy and sell Sterling or who bet on currency movements based on their view of future events.

And how does currency value influence stock markets? A 2017 article in City AM argued that the strength of a country’s currency can have a surprisingly large bearing.

It argued that after President Trump was elected in the US, the S&P 500, the benchmark US share index, rose 10% to new all-time highs in the month following and cited the US dollar, which gained 3% during the same period as a key driver.

By comparison, after the 2016 Brexit referendum in the UK Sterling tumbled while the FTSE 100 rose sharply. In the three months following Brexit, the index rose 10.4%, largely, it argued, because the majority of FTSE 100 companies receive their revenues in foreign currency.

So what is different now to have caused both Sterling and the FTSE 100 to drop simultaneously? Arguably against a backdrop of slowing global trade and Brexit uncertainty a significant impact has been the ongoing trade war between the US and China.

The latest move has been a decision by Donald Trump to impose new tariffs on a further $300bn of Chinese imports in addition to those already in place.

Clearly, in such a volatile situation all the old “assumptions” about currency values and market behaviour are called into question and businesses and investors may need to review the basis on which they make decisions!

Q2 insolvencies offer no sign of economic storms easing

rising insolvencies indicate continued stormy ecoomic weatherThere are no signs of the pressures on businesses easing off as insolvencies in the second quarter of 2019 (April to June) continued to climb, according to the latest figures released by the Insolvency Service.

While the number of compulsory insolvencies fell, there was a significant increase in the number of CVLs (Company Voluntary Liquidations), which showed a 6.9% increase, an increase of 2.6% in the total numbers of insolvencies compared to the first quarter of the year.

Compared to the same quarter in 2018 the numbers of insolvencies have risen by 11.9%, the highest underlying rate of insolvencies since 2014 according to the Insolvency Service.

It reports that those businesses that have fared worst in the second quarter have been “the accommodation and food service industry with 74 extra cases compared to the 12 months ending Q1 2019 (an increase of 3.4%) and the construction industry with 37 additional insolvencies (a 1.2% increase)”.

The latest Red Flag Alert for the second quarter of 2019 from Begbies Traynor also emphasises an increase in businesses in “significant distress”, to 14% of all UK businesses while the average debt of insolvent companies has more than doubled – from £29,873 in 2016 to £66,226, it says.

Set this against a backdrop of a weakening global economy, as reported by the World Bank in June, in part thanks to business uncertainty because of international trade tensions.

In the UK context, the future for the economy remains completely unknown given the new Prime Minister’s Brexit strategy. This is evident from the factory output figures for July that reported the lowest levels for six years, slowing consumer borrowing, and this week the value of the £Sterling dropping to its lowest level for two years.

While low exchange rates may be a positive for UK businesses involved in exporting, making exported goods and services cheaper, they will also add to business costs on any supplies and materials imported from outside the country where the net result is that we are worse off given the UK trade deficit which was £30.8 billion in the 12 months to April 2018.  Another factor is consumers who are continuing to spend but may prefer to stay at home instead of having more expensive holidays abroad.

Given also the ominous noises about continued UK-based car manufacture, most recently from Ellesmere Port, depending on the post Brexit conditions here, not to mention the continued carnage in High Street retail, more people will also be worrying about their future job security.

It would be great to be able to say that the end is in sight but sadly, with so many “known unknowns” the economic weather outlook has to remain stormy.

Get independent advice before embarking on costly business litigation

Business litigation can be costlyIt is a sad fact that disagreements can arise in the best-run businesses and if they cannot be settled amicably they can result in costly business litigation.

It is also a sad fact that legal fees are often far greater than the damages awarded and. Worse, if you lose and have to pay those of the other side.

While most litigation involves a financial settlement, the underlying dispute can be for a myriad of reasons. Many disputes relate to the non-payment for goods or services that one party believes were provided while the other believes were defective or the terms were not observed. Others may be down to parties falling out or wanting to terminate contracts. Whatever the cause taking issues to court can be extremely expensive if the facts are in dispute.

Often when each side feels that it has much to lose emotions will run high and judgement may be less than impartial.

Very often, when the parties involved realise the length of time that may be involved and the escalation of costs starts to bite they end up agreeing to settle out of court. But before coming to terms with this reality they may have spent considerable sums that might not have been necessary.

So, it makes sense before embarking on costly business litigation for all parties involved to establish clearly and accurately the facts of the dispute and the realistic prospects for a satisfactory outcome.

Simply assembling all the relevant paperwork as evidence before appointing lawyers will save a lot of money and may even avoid an expensive mistake as it will highlight your ability to substantiate claims.

This may involve examining the terms of a contract to establish the nature of a breach such as non-payment for goods and services, not meeting deadlines, the definition of poor service or substituting a material with one of lesser quality.

It may mean establishing precisely what had been agreed by the partners or shareholders including whether there were any terms or conditions that should be referred to should either party wish to leave.

Partnership and shareholder disputes, like employee termination, may be cited as being down to a breach of duties or obligations or poor performance but all too often these are contrived reasons that are used to justify another reason such as a clash of personalities.

Service and contract disputes are rarely black and white matters and can result in lengthy court hearings, as also can breaches of confidentiality or copyright.

While you might think you are the best person to consider the merits of any litigation it makes sense to engage someone impartial to carry out this task as they will help you remove emotion and pride from any decision.

It is difficult to decide who to use since engaging the right person can also remove a procedural bias. There are likely to be a number of different ways of resolving the dispute where for example, some lawyers like the adversarial nature of the court room, others might promote mediation or arbitration as a form of dispute resolution.

Before engaging a lawyer, a trusted adviser may be useful. While they may not have the same insight as a barrister who might advise on the likely outcome in court, they can be objective and hopefully wise.  I have often simply picked up the phone to the other party and met them to resolve matters for clients long before they escalate. It is a tragedy that emotion and pride tend to be the real barriers to resolving disputes.

Whoever you get to advise you, assembling your evidence and getting an early independent perspective can help avoid fruitless litigation or at least identify the most appropriate procedure for resolving matters.

Can fashion retail ever be made sustainable?

fashion retail garment workersIt is no secret that High Street retail has been in dire straits for some time, and clothing and fashion retail have particularly suffered.

The most recent, and perhaps most high-profile example has been the struggles of Philip Green’s Arcadia Group, comprising the clothing chains Topshop, Topman, Evans, Wallis, Miss Selfridge, Burton and Dorothy Perkins, to use CVAs as a way of restructuring.

But it is not only physical fashion retail stores that are struggling. ASOS has recently issued its second profit warning in seven months, albeit blaming IT chaos in its overseas warehouses despite overall sales being up 12% in the four months to 30th June.

Obviously, cheap prices and turning around lines quickly, have been the two main things on which fashion retail has been relying. As a consequence, clothes are often made by low-paid workers in appalling conditions, in factories located in countries like Bangladesh.

However, for some years there have been demands from consumers for such workers to be paid fairly and treated better following revelations about their working conditions.

That did not, however, mean that consumers were prepared to pay more for their clothes or necessarily to wear them for longer.

Marketing plays a big part in this kind of consumer environment by encouraging shoppers to “be ahead”, “get the newest” and stay “on trend” in order to encourage them to buy and to do so often and repeatedly.

But as I said in my blog on Tuesday, corporate survival is coming increasingly dependant on a variety of demonstrably ethical behaviours, including protecting the environment and treating employees fairly.

It may be that we have reached a critical moment where the zeitgeist among consumers is changing in a way that is focussing fashion retail on the need to change its business model by marketing its ethical and sustainable credentials.

What would sustainability mean in fashion retail? 

Clearly, a recent initiative by Boohoo.com highlighted its ‘new’ sustainable credentials by the launch of its range of “recycled” clothes.

The collection, the company says, has been manufactured entirely in the UK to cut air pollution and its garments are made from recycled polyester, with no environmentally unfriendly dyes or chemicals being used.

It is not yet clear if this is marketing puff or a shift in values as the launch has been greeted with some scepticism, according to an article on the BBC news website.

It may be a start but the EAC (Environmental Audit Committee) argues that it doesn’t address other issues with clothing, including the fact that synthetic fabrics used to make such garments shed micro-fibres when washed, polluting waterways or that even those that are disposed of through retailer take-back schemes or in charity collection bins will eventually find their way into landfill.

The Independent recently reported that fashion retailer Net-a-Porter plans to launch a new platform, Net Sustain, to highlight brands meeting certain criteria regarding sustainability. Attributes will include “Locally Made”, when at least 50% of a brand’s products have been manufactured within their own community or country, and “Craft & Community”, where products showcase exceptional, artisanal skills. The platform will launch with 26 brands and 500 products.

However, other pressures are also having an influence, not least all the publicity about plastic waste littering the world’s oceans and land, which it has been argued is not helped by the rise in online shopping where packages generally use plastic materials.

Fair pay for overseas garment workers and the use of sustainably grown fibres, such as cotton are also factors.

Another is the popularity of new initiatives such as the decluttering movement started by Marie Kondo who has been encouraging us to hoard less “stuff”, or the Tiny House movement that is encouraging us to use less space.

One company in Suffolk has been in the forefront of fair trade and environmentally sustainable clothing production for five years.

Where Does it Come From, operates in both India and in Africa and offers a complete history of its manufacture with each garment. It has to be said their range is not as cheap as perhaps the fast-turnaround online and high street fashion retail can produce but its ethical, environmental and sustainability credentials are impeccable.

And this is perhaps the main issue for fashion retail, promoting their values as evidenced by their actions rather than by their marketing. Will consumers be willing to pay more and buy less frequently to satisfy their concerns?

The Suffolk business has clearly been able to survive and has some extremely loyal customers but whether its model can work in the mass fashion retail market remains to be seen.

 

Long term corporate survival can only be achieved by having the right values

corporate survival means eliminating industrial pollutionThere are signs that the Gordon Gekko culture of “greed is good” is dying and that corporate survival will depend on not only giving customers what they want but also being seen to have and act on a wide range of ethical values and behaviours.

In an environment of high employment and significant skill shortages in many sectors, the bargaining power of millennials and Generation X will only strengthen as the older generation of employees retires.

Equally, the power of consumers and customers choosing who to buy from is having a greater impact on corporates’ processes and practices.

In this context, CSR (Corporate Social Responsibility) policies will no longer be enough. Too many of them have been unmasked as marketing and PR exercises among the larger corporations and of little practical substance. SMEs often fare better, however, being closer to their localities and customer base, where their greater visibility puts them under pressure to be more accountable.

However, movements like Extinction Rebellion, highlighting the urgency of acting on environmental damage, as well as greater publicity about the treatment of whistleblowers who have unmasked the less than ethical behaviours of their employers (eg the Cambridge Analytica scandal), often at great cost to themselves, have focused attention on better ways of assessing corporate behaviour.

To address these concerns, ESG (Environmental, Social and Governance) is becoming more and more popular as way of assessing Sustainable Investment.

ESG incorporates measurements of how businesses respond to climate change, treat their workers, build trust and foster innovation and manage their supply chains. ESG is also becoming a key marker for investors decisions, according to a blog by npower, which claims that “a quarter of the world’s professionally-managed investment funds now only invest in companies that demonstrate solid ESG credentials”.

It quotes Nigel Topping, the head of the We Mean Business coalition of 889 companies with $17.6trn in market capitalisation: “If these challenges are tucked away and approached solely for compliance reasons, they are not being integrated. And if businesses aren’t incorporating them into financial decisions and long-term planning, then they are not being taken seriously – which leaves the business poorly prepared for the future.”

Businesses can adopt a process of continuous improvement on their energy efficiency, for example, by adopting the globally-recognised ISO 50001 standard, which can be verified and used to reassure customers, clients and investors.

Employee and consumer pressure means incorporating ethics for corporate survival

Investor, employee and consumer pressure is mounting for companies to incorporate the values that will help ensure corporate survival, despite some being at the expense of short term profits. This is somewhat at odds with many senior executives whose focus has been on reporting profits. The focus on profits has been understandable since they underpin most reward structures but this will need to change as ESG gains acceptance.

There are many recent examples of changes to corporate behaviour as a result of consumer pressure, most notably this year’s focus on plastic waste and environmental pollution.

Not surprisingly, the superstores and hospitality industries have been in the forefront. McDonalds has committed to completing a roll-out of bringing in paper straws in all its outlets by the end of the year.

Waitrose removed all its plastic straws from sale last year and has promised to reduce plastic whenever possible, while Iceland aims to be “plastic-free” by 2023.

Single-use plastic carrier bags are no longer to be had in virtually all the superstore chains and both Morrisons and Sainsbury are rolling out plastic-free fruit and veg areas across their stores.

But ethical behaviour is not focused solely on environmental concerns.

Just a few days ago the Chartered Institute of Credit Management (CICM) suspended another 18 businesses from the Prompt Payment Code for failing to pay 95% of all supplier invoices within 60 days. They included Screwfix, Galliford Try, and Severfield.

Employees and potential employees are also becoming more discriminating.

Research in the USA has revealed that:

* 75 percent of millennials would take a pay cut to work for a socially responsible company.

* 76 percent of millennials consider a company’s social and environmental commitments before deciding where to work.

* 64 percent of millennials won’t take a job if a potential employer doesn’t have strong corporate responsibility practices.

PriceWaterhouseCooper has also studied the millennial generation and found that “corporate social values become more important to millennials when choosing an employer once their basic needs, like adequate pay and working conditions, are met”. Their report concluded that “millennials want their work to have a purpose, to contribute something to the world and they want to be proud of their employer.”

There are moves afoot from the Government, too, to strengthen protection for those who discover unethical, or unlawful, behaviour in their workplaces and become “whistleblowers”.

Business minister Kelly Tolhurst has announced proposed new laws to ban the use of NDAs (non-disclosure agreements) that stop people disclosing information about their employer to the police, doctors or lawyers.

There remains the issue of excessive corporate executive remuneration to tackle. While there has been a significant increase in the numbers of shareholders who have questioned CEO and director level remuneration, so far, the High Pay Centre has found that every single vote at a FTSE 100 firm was approved between 2014 and 2018.

Clearly there is some way to go before the adoption of ESG by corporates becomes the norm, but the momentum is there and businesses should pay heed as their corporate survival will increasingly depend on it.

What are the prospects for UK manufacturing?

UK manuafacturing prospectsUK manufacturing output growth held steady in the three months to May, according to the Confederation for British Industry’s (CBI) monthly industrial trends survey.

In July, the CBI reported that in the three months to June UK factory output had turned in its slowest quarterly growth since April 2016.

Furthermore, the CBI reported that ten out of sixteen sub-sectors experienced growth with chemicals, food, drink and tobacco being resilient, while car manufacturing struggled.

Confusingly the CBI also reported that order books deteriorated in the quarter.

By comparison the monthly snapshot from IHS Markit and the Chartered Institute of Procurement and Supply showed that activity levels in the UK manufacturing sector in June had dropped to the lowest level since February 2013.

IHS Markit/Cips found that high stock levels, ongoing Brexit uncertainty, a deteriorating economic backdrop and rising competition contributed to the drop in output. Weak export demand amid a faltering global economy also had an impact.

These figures, while confusing, support the hypothesis that UK manufacturing prepared itself for Brexit in March by building up stock levels and in doing so increased output. However, since then much of this productivity has been ratcheted back.

So where are we?

What is the true state of UK manufacturing?

The publisher, The Manufacturer, takes an up-beat view.

It argues that “Contrary to widespread perceptions, UK manufacturing is thriving, with the UK currently the world’s eighth largest industrial nation. If current growth trends continue, the UK will break into the top five by 2021.”

In their annual manufacturing report for 2019 they argue that there is a “surprisingly resilient mood among manufacturers with 81% saying they are ready to invest in new digital technologies to boost productivity.

But they do not deny there are challenges.

Of course, Brexit and ongoing uncertainty, is having an effect on strategic-planning and business prospects with 51% arguing that the Government should be doing more to promote exports, especially given the currently favourable exchange rates from an export perspective.

Among the challenges the 2019 survey identifies for UK manufacturing is the need for a clear strategy and strong leadership when introducing smart technology into the processes, citing lack of coherent digital strategies and in some cases an inability to understand the practical applications that technology can offer.

Another issue is the lack of skilled engineers. Some respondents argue that the education system and the Government’s approach are both failing. The survey reports that some companies are now establishing their own training schemes and academies because the situation is so bad.

However, I would argue that while the mainstream education system undoubtedly plays a big part, there is actually no reason why businesses should not be doing  so as well. After all, they are in the best position to know precisely what skills they need in a way that schools and colleges perhaps cannot.

On exporting, there were some in the survey that argued that Brexit might be a good thing in stimulating more UK manufacturing rather than being locked into and dependent on complex transnational supply chains.

One manufacturer in Cheshire is reported as saying in a Guardian article in June this year: “We are under the threat of closure all the time.”

But the article goes on to describe how this particular manufacturer is fighting back: “If we didn’t have a drive on productivity we wouldn’t be in business.”

Their solution has been to drive forward with robotic technology and with the support for their proposed changes from their workers. They have involved everyone in the process, mocking up robotic workstations in cardboard to see how they fit in with the workforce, with the result that “while robots have replaced some jobs new ones have come and staff have been trained up along the way”.

All this is without considering the opportunities for completely new businesses that will arise from the growing drive to clean up the environment and make activity more sustainable which will no doubt create opportunities among the more innovative producers for new processes and ways of doing things.

Perhaps we should not write the obituary for UK manufacturing quite yet.