Categories
Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Creative thinking and innovation are crucial to manufacturing growth

Addressing the challenges facing UK manufacturing requires creative thinking, innovation and fundamentally investment if it is grow in the medium and longer term. Especially where real growth can only be achieved by exporting those products and services we provide.
Unfortunately, too many of the analyses published in the media focus only on the short term and are often also simplistic.
Where one commentator suggests that manufacturing is benefiting from the reduction in oil and raw materials prices, another focuses on the difficulties that the high value of sterling causes for exports. Where one analyst sees a continuing downward trend from the first two quarters of 2015, another focuses on the expansion in trade shown by an increase in trade and orders in October.
All this suggests that it is foolish to draw conclusions for the whole sector and that what may be helpful to one manufacturer can be a problem for another.
For example a manufacturer of specialist equipment for the oil industry is likely to see a contraction in orders due to the contraction in the oil industry whereas a manufacturer that relies on fossil fuels for energy may actually benefit from energy cost reductions.
However, these are relatively short term fluctuations and in the longer term all UK manufacturers need to play to their strengths, which are their reputation for high-quality, precision and speed of supply.
UK manufacturing cannot hope to compete in the mass market with competitors from places like Asia where wages are lower.
It may be that their most sustainable route to success and growth is to focus on using doing things differently and using innovative technology such as robotics, on supplying high-quality short run products, and on offering support and maintenance services that all rely on their valuing skilled engineers and technicians.
All this means investing much more in R & D, technology, plant & machinery and employee skills.
Essentially we need to invest in manufacturing if it is to grow and in particular if we want to grow exports.

Categories
Business Development & Marketing Cash Flow & Forecasting General Rescue, Restructuring & Recovery

Maghreb and Middle East Volatility Adds to Pressures on UK Business

Pressure on UK businesses is already intense as a result of the Government’s austerity measures designed to cut the UK budget deficit.
Already facing changes to NI payments, rising prices for raw materials as well as January’s increase in VAT from 17.5% to 20% and the dilemma of how much of these additional costs to pass on to consumers, now upheavals throughout North Africa and the Middle East are adding enormous uncertainty.  Oil prices have soared to their highest levels for two years, with impacts on all areas of the economy.
But it is not only oil prices that could add to business instability.  The UK is Egypt’s largest investor at around £10 billion, with around 900 UK companies involved, in
Tunisia exports from the UK in 2009 totalled £153 milliion, while imports were at £406 million, and trade with Libya is estimated to be worth £1.5 billion. British exports of goods to Libya were worth an estimated £1.29 billion in 2010.
The impacts will be felt on the UK travel industry, UK construction involved in building and infrastructure projects in Egypt and Tunisia but also on domestic services, for example Libyan-funded education in the UK of more than 6,000 students on undergraduate and postgraduate courses, worth an estimated £160 million.
I believe that, while businesses should try to hold their nerve, even those businesses that have survived so far without getting into difficulties might be wise to not only pay close attention to cash flow but also to revisit their business plans to put themselves in the best possible shape to be able to cope with the continuing uncertainty.