December 4, 2019
The North East has long enjoyed a healthy trading relationship with Europe.
For years, official Government figures repeatedly told the story of a region eclipsing UK counterparts with an envy-inducing positive trade balance fostered by prolonged export demand.
Furthermore, go back more than 30 years and Nissan – then finding its way as a car maker in an area reared on shipbuilding and coal mining – was sending out its own European message.
With its first Sunderland-made Bluebird saloon yet to fly the nest, the company took out an atlas- style newspaper advertisement that used arrows – reaching out across the North Sea – to signal its intent in becoming the continent’s top imported marque.
The present-day landscape, however, is in flux, with Britain’s tangled European Union (EU) unspooling cloaking firms with uncertainty.
In a region where the EU accounts for 60 per cent of all manufacturing exports and the sector makes up 15 per cent of the economy, businesses – from multinationals to the SMES that nourish their stock inventories – enter the new year awaiting clarity on their new relationship with Europe.
However, June Smith, regional director – North at MAKE UK, which champions Britain’s makers, lobbies Government and offers firms HR, cybersecurity and health and safety advice, skills training and productivity consultancy, says that while the uncertainty is understandable – and tangible – there remains much potential and opportunity for companies to progress and succeed in 2020 and beyond.
By laying solid foundations, through the grasping of new opportunities and diversification of operations, for example, she says firms can become much nimbler in managing whatever trading eventualities arise.
“Manufacturers don’t know what to plan for,” she says, revealing latest MAKE UK findings show 64 per cent of British makers – up to September – had experienced some negative impact from Brexit over the last two years.
“It’s not all Brexit – some companies have said market forces from places such as the US and China have played their part – but manufacturers are frustrated by Brexit,” adds June.
Pointing to previous MAKE UK findings that showed North East companies suffered the largest drop in investment and employment intentions across the UK due to Brexit uncertainty, June
says firms must use the situation to revise and refresh their strategy on customers, supply chains, markets and even their physical trade gateways.
“Fundamentally, even if Brexit hadn’t happened, manufacturers still need to do three things for success; address skills, improve productivity and futureproof,” she says.
“I see Brexit as a catalyst for improving the health of businesses and planning for growth.
“Manufacturers are resilient; they have come through a recession and what they can do is plan for the areas they are able to,” continues June, who is sitting in MAKE UK’s offices on Team Valley Trading Estate.
“Businesses need to futureproof and that is about diversifying as much as they can, doing things differently and collaborating where possible,” adds June, who also says firms must assess new geographies.
“We know the Middle East and Africa, and a lot of people are looking at India too.
“Companies can also look at logistics planning; if they are based up here but always go to Dover, can they look at using the Port of Tyne, Teesport or Port of Hull?”
Another area June says businesses must engage further with is data, specifically the Fourth Industrial Revolution.
More companies are embracing disruptive technologies, such as the Internet of Things, robotics, virtual reality and artificial intelligence to make operations increasingly efficient and factories more productive.
However, June says an element of the manufacturing and engineering community remains apprehensive of embracing the shift, which is where MAKE UK – which also includes the UK Steel and NDI bodies that represent the country’s steel and defence and security sectors, respectively, – comes in.
June says it is imperative firms acknowledge the benefits of bringing industry and academia together, which is a trait that already has good traction in the North East.
“When we talk about the Fourth Industrial Revolution, we look at where companies are on that journey and how they can improve competitiveness,” says June, who cites the example of an advanced fabrication company using wearable sensors to capture real-time data on motion and lost time against key performance indicators.
“Our figures show 66 per cent of firms are looking at what it means, but only four per cent have made a step change to run with it.
“Not everyone can be Rolls-Royce and invest £100,000 into having a smart factory, but the message to businesses is, ‘don’t be frightened about it,’” continues June.
“The trick is to work with universities and organisations such as ourselves to understand what the breadth of advanced manufacturing technologies and digitalisation has to offer.
“It is about dipping your toe in the water and getting an early return from modest investment so companies can understand what path they might go on.”
June says such changes will be supported by the near 125-year history, knowledge and standing of MAKE UK, which sits alongside fellow independent bodies such as CBI and the Institute of Directors as a bridge between industry and Government, and is also a member of the European employers’ organisation Ceemet.
“Our focus is on the growth, sustainability and future of manufacturing, and we have 35 to 40 very highly-skilled people based in our Westminster office who look at how we can lobby, shape and influence Government through our own policies to achieve that,” she says.
“We are highly regarded in Government; we take our members’ intelligence – that is issues, challenges, good practice and success stories – and feed it into the national picture.
“Our message is that manufacturing is the backbone of the British economy and that we need the Government to look at what they can do to help it continue doing well.”
Furthermore, June says MAKE UK’s recent rebrand – it was previously known as EEF – points to an organisation in touch with a changing environment and an awareness of engaging with the younger generation.
Where the moniker has changed, so too has its colouring, with traditional black and white replaced by red, orange and dual tones of blue.
“We are still what we have always been,” says June.
“The rebrand and colouring shows British manufacturing is very much alive and kicking. To our young people, it is also saying we are a vibrant sector.
“Manufacturing and engineering aren’t your dark satanic mills. It is digital, it is advanced manufacturing, and we lead the world in many things.
“If you’re a small business, we can help you grow and be part of an upward supply chain. We can also help you innovate and commercialise products.
“Additionally, if you’re an OEM, a blue-chip company or a foreign investor, our message is, ‘still believe in the UK.’”
A key element to ensuring the UK manufacturing sector remains in such fertile state will depend a lot on the country’s eventual Brexit deal, a point highlighted in MAKE UK’s pre- General Election manifesto.
Focused on creating growth and a skilled digital economy, the strategy rests on four key pillars of frictionless trade, regulatory alignment, access to labour, and a lengthy Brexit transition period, which are underpinned by the removal of a potential No Deal EU divorce.
“The EU is the key export market for the North East,” says June, “which makes us particularly vulnerable if we have a No Deal Brexit and barriers to trade.
“We need a framework so manufacturers can make sensible, futuristic investment decisions.
“We want frictionless trade, which will allow continuation of just-in-time delivery, and access to skills, which would fill gaps and allow businesses with a presence in the UK and EU to interact with each other.
“We also need alignment in terms of standards and arbitration and need trade deals that have longevity.
“What business want, more than anything else, is certainty – and they want a deal.”