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🚨 Inflationary pain might be here to stay

Manufacturing Mondays
Manufacturing Mondays
Yikes, inflation has hit a 30-year high.
It’s not often that inflation is discussed as regularly as it has been in recent times. It’s now even the topic of conversation with friends and family around the dinner table - no. Ok, maybe just mine.
But many of us rarely understand what we are talking about. Inflation could come about for many different reasons, including:
  • A sharp increase in consumer demand following a downturn (a pandemic rebound)
  • A cost-push style from the rising cost of raw materials, energy, and labour
  • Or printing too much money
But today we are facing a combination of the former two types.
It’s becoming more obvious that expectations of high inflation being “temporary” have been misconstrued with no real indication of how long “temporary" might be.
This poses a dilemma for manufacturers who are facing the brunt of inflation head-on with input inflation currently at 13.5% - more than it was around this time last year! On top of this, manufacturers are expecting a sharp increase in energy costs, not just directly but for their employees too, who will inevitably be seeking pay rises to cover their own cost of living crisis.
⚠ If these worsening conditions are not dealt with it may lead to an increase in shutdowns for manufacturers who will inevitably struggle with cash flow to weather the storm.
✍🏽 This week’s intro remarks are from Fhaheen Khan, Senior Economist.

🆕 Guess who we've been talking to
In this new section, we’ll be sharing the recent conversations we’ve had with MPs, Government, and the Opposition, pushing our core campaign messages to the people that matter.
🌍 Cross-party interest in how to boost manufacturing exports
Listening in to us talk about all things operating without borders was firstly Peter Gibson, PPS at the Department for International Trade, where we discussed how manufacturing can lead the way in the Government’s Global Britain and also Nia Griffiths, Shadow Minister for International Trade, where we shared views on the Government’s Free Trade Agreements.
🎓 Education, education, education with the Opposition
Actually, it was a little more than that! We had the ear of the Shadow Cabinet when it came to building resilient workforces and places having joined Angela Rayner MP for a roundtable on the Labour Party’s Green Paper on employment rights as well as meeting with Bridget Philipson MP, Shadow Education Secretary, with a whistle-stop tour of our views on vocational education and skills – of course, an invitation to tour our own Apprenticeship Training Centre was also sent! 
Our full net-zero roadmap has landed
Remember COP26? We published an interim roadmap for the sector to reach net-zero last year, and today in partnership with Inspired Energy we’ve published the full roadmap - with a sub-sector breakdown.
Net-zero, despite the challenge, presents one of the single biggest opportunities for manufacturing. The sector will be key to developing and designing the technologies that will help the rest of the economy decarbonise.
What does the roadmap reducing emissions look like? 
Make UK / Inspired Energy: Net-zero roadmap
Make UK / Inspired Energy: Net-zero roadmap
Yet there remain some big challenges facing manufacturers in their bid to reach Net Zero, from decarbonising fossil fuel-intensive processes to reevaluating their raw materials supply chains, to staying cost-competitive.
So we make a series of recommendations specifically for each sub-sector that can support them in their journey to net-zero - here are a few:
⚫ Aluminium - Develop a national reuse, remanufacturing and recycling strategy to reduce aluminium scrap exports and boost domestic use of recycled aluminium.
⛓ Steel - Policies to support CCUS and hydrogen-based steel production.
💧 Water - Consider implementing a mandatory water labelling UK-wide scheme to help accelerate demand management options.
🔦 Campaign spotlight
Delivering sustained stable growth
Our third policy campaign of this year focuses on how manufacturers, together with Government, can deliver sustained stable growth in 2022 and beyond.
☑ Did you know, for every 1 job created in the manufacturing sector, a further 3 are created in other industries.
The manufacturing sector, therefore, has a crucial role to play in the recovery of both our national and regional economies, but also in the Government’s bigger plans on levelling up (whatever it may mean!).
Make UK's 2022 policy campaign: Delivering sustained stable growth
Make UK's 2022 policy campaign: Delivering sustained stable growth
In order to deliver sustained and stable growth in the next decade, manufacturers will be looking for Government to create a conducive business environment that supports this ambition to invest, grow and expand.
But the cost of doing business is increasing, hampering growth and investment.
There are, however, several policy levers available to Government, including rethinking regional devolution or taking a sectoral approach. We believe not because we are biased it should be those that support the UK manufacturing sector. Not only does our sector pay wages 13% higher than the economy average, but it also accounts for 65% of R&D, and 16% of all business investment made in the UK. Expanding our manufacturing sector can help build the high wage, high-value economy we hear about so often from Government.
🚀 So let’s be ambitious and commit to a National Manufacturing Plan that set out how we can ensure the manufacturing sector accounts for 15% of UK GDP by the end of 2022.
Look out for publications across the year on:
  • Manufacturing Outlook - a quarterly round-up of the state of UK manufacturing
  • The state of UK housing and role of volumetric housing
  • Manufacturing Monitor - short sharp papers on topical issues impacting the sector
If any of these sound interesting and you want to collaborate, or just learn more, get in touch with the team.
ICYMI
📺 Make UK / PwC webinar: Executive Survey 2022
Last week we gathered a panel of experts to talk about manufacturers expectations for 2022, and what the sector needs from Government to grow in the year ahead. We discussed everything from how to stimulate the development of hydrogen and CCS, how to encourage more business-led R&D, and an integrated skills strategy to support new jobs.
🧵 What’s the thread that ties it all together?
Every panellist spoke about the importance of a cross-Governmental, overarching strategy to bring it all together. The drumbeat of support of a national manufacturing white paper is growing.
Ps. A big thanks to our panellists: Dan Thomas, Business Editor FT, Cara Haffey, Automotive and Manufacturing Leader PwC, Adam Hawksbee, Deputy Director Onward, Seema Malhotra MP and Shadow Minister for Business and Consumers, Mark Pawsey MP and Chair of the All Parliamentary Manufacturing Group (APMG) and Stephen Harrison, CEO Harrison Wipes.
Watch the full session 👇
Make UK and PwC Executive Survey 2022 webinar
Make UK and PwC Executive Survey 2022 webinar
Come and join our growing team
🔎 The Make UK policy team is on the hunt for a Research & Intelligence Manager.
Your job will be to lead Make UK’s survey planning, delivery and analysis to support our policy research, membership intelligence, as well as our campaigning work.
*Experience of SPSS is essential*
There are more details below. Please share with anyone you think would be a good fit. And if you want to find out more please get in touch.
Research & Intelligence Manager
We ❤️ policy and manufacturing, so let’s talk:
📱 Twitter
📧 Email
💬 LinkedIn
Copy editor: Bhavina Bharkhada, Head of Policy & Campaigns
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Manufacturing Mondays
Manufacturing Mondays @MakeUKCampaigns

We discuss the big issues impacting the UK manufacturing sector, and our policy ideas to overcome them.

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