The Need for a Brexit Transition Period
On Wednesday 22nd February 2017, at the National Manufacturing Dinner in London, Dame Judith Hackitt CBE, Chair of EEF, warned that that the government walking away from the EU with no deal in place is not an option for manufacturers in Britain and will leave business on a cliff edge of uncertainty that will damage jobs and investment.
“What we must have is a deal that ensures our economy continues to thrive and is not sacrificed on the altar of satisfying assumed expectations in a referendum vote. That means a settlement that allows us to continue investing and creating the high-value jobs our economy will need in the future.”
Dame Judith also urged the government to take the lead on making the positive case to the British public that: “the industry does still need access to the skills which EU workers bring, including high-quality skills, all of which are important in supporting our economy and public services.
“Our sector must be renowned for high-value, high-skill employment. We must train our own UK workforce while also seeking skills from overseas where needed and promoting our own home-grown skilled workforce on a global stage.”
The fall of the pound against other currencies since the UK voted for Brexit will now be affecting those manufacturers importing goods or paying for goods in currencies that have increased in value.
Manufacturers who are part of complex supply chains will find it increasingly difficult to pass the entire cost of increased supplies to business further down the chain.
According to a regional growth expert, leaving the European Union could result in the demise of business support services unless the government is willing to plug funding gaps.
Lorraine Holmes of the manufacturing growth programme, a support scheme for small manufacturers, said that the eventual demise of European backing for such initiatives would mean that the government and local enterprise partnerships would have to step in.
Work Force Challenges
Perhaps the biggest threat to the manufacturing industry will be the difficulties companies will face when attempting to recruit the highly skilled employees required and the resultant skills gap created.
The Government are aware of this and, in an attempt to develop a young and skilled manufacturing work force in Britain, it will be introducing an apprenticeship levy (from 6 April 2017), which is payable by employers with payroll costs of more than £3m a year. Further, the Government has announced that it will contribute 10p for each £1 paid by an employer.
Positive Start to 2017
With all the challenges which British manufacturers are set to face, many believe that Britain will still be able to trade with competing markets purely based on its reputation. The UK still has the 5th largest economy and British manufacturers are known worldwide for high quality production and skilled labour forces.
According to the latest Business Trends Report by accountants and business advisers, BDO LLP, it appears that the Brexit and Trump effect have not dented UK business optimism as manufacturing confidence has reached a 20-month high.
The latest CBI industrial trends survey found a net 8 per cent of businesses reported total orders at above normal levels for the three months to February, the highest reading since the same month in 2015 and orders for British goods this month reached their highest level in two years.
The Corporate Team at Thursfields has seen a marked increase in instructions from manufacturers in recent months.
Tim Edwards leads Thursfields’ Manufacturing Sector and has many years of relevant industry knowledge to support clients’ transactions.
He recently advised ActOn Finishing Group (ActOn) (the UK’s leading expert in designing and developing machinery and consumables for mass finishing applications), on the acquisition of the entire issued share capital of Stourbridge based, Tecwin Limited (t/a Quality Blasting).
Sid Gulati, Director and Shareholder of ActOn, commented: “This was an important step forward for the group to develop a complete solution on surface finishing. We were impressed with the professional and pragmatic approach which Thursfields took during the transaction. Tim Edwards, in particular, was on hand to guide us throughout the process and demonstrated considerable expertise in the final stages of the acquisition, which proved particularly complex. I would not hesitate to recommend their services.”