Manufacturing Mondays

By Manufacturing Mondays

🚢 The latest cost to hit UK manufacturers? Shipping

#18・ Feb 14, 2022

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Manufacturing Mondays

@MakeUKCampaigns

It’s that time of the year - our Q1 Regional Advisory Boards have kicked off!

The Policy team have and will continue to throughout the month, be touring the country to get the very latest manufacturing intelligence across the country.

We’ll be asking what are the big issues impacting manufacturers, and what can Government and Industry do to overcome them?

So far, the top member concerns focus on the:

increasing costs including energy and shipping;
difficulty recruiting talent, wages and the NICs increase; and
the impact of new customs rules.

👀 Nothing too big for Government and Industry to fix then.

On that note, happy Monday!

Trade, supply chains and shipping costs - what is going on?

Last week Make UK Director for International Trade, Richard Rumblelow gave evidence to the International Trade Committee on UK trade negotiations with Australia. Whilst most of the session was dominated by the barriers faced by manufacturers to export including technical standards and tariffs, there was consensus the supply chain challenges show no signs of improving.

Make UK gives evidence to the International Trade Committee

“Tariffs aren’t the be-all and end-all for manufacturing exporters, says @RRumbelow of @MakeUK_ at @CommonsIntTrade on the UK-Australia FTA.

As an exporter, if you’re facing barriers to entry around technical standards, the issue of tariffs fades in importance. https://t.co/cFkgljyH7B”

twitter.com

In fact, they are getting worse, with some estimates suggesting that conditions won’t improve until at least 2023.

We have warned for some time of the impact of the surging cost of moving goods - last autumn we wrote to the UK’s competition watchdog, the Competition and Markets Authority (CMA), asking it to look into the world’s biggest shipping companies and whether soaring costs could be justified.

The CMA said they could not unilaterally address shipping costs, all whilst experts forecast that the biggest global shipping firms would make significant profits in 2021.

Manufacturers demand action over ‘cartel-like’ shipping costs

The price being paid for a 40-foot container from East Asia to Europe is £10,000 – about 10 times higher than at the onset of the pandemic

www.telegraph.co.uk

📊 How does this link to other official data?

The latest trade stats reveal what manufacturers were doing just before import controls began last month. According to the ONS, imports from non-EU countries continues to grow (£0.6bn), driven mainly by expensive fuels, whilst exports to the EU also increased (£1bn) suggesting businesses on this side of the shore were unlikely stockpiling towards the end of last year.

However, the same can’t be said for EU manufacturers who may have been building stocks in anticipation of increased difficulties when exporting to the UK. We’ll have to wait and see next month how these figures develop.

🤔 In other ~~better~~ news

UK GDP has now reached almost exactly its pre-pandemic level last seen in February 2020. Granted this required us to lose some GDP (around 0.2%) first, but let’s not focus on that…

Besides, much of this decline was expected given Omicron restrictions were in effect leaving most of the UK to celebrate a relatively quiet Christmas. With the cost of living rising fast, it seems reasonable that consumers are keeping their pockets closed off in the meantime and even with restrictions ending it’s unlikely households will jump at the chance to return to their shopping habits.

Reliving National Apprenticeship Week

In *actual* better news, all last week we celebrated apprenticeships for #NAW2022. ICYMI what we did, here is a quick recap:

🚀 The Apprenticeships in Manufacturing (AiM) group launched

On Tuesday the Minister for Skills, Alex Burghart MP announced the launch of a new partnership between industry and Government to grow the number of high-quality apprenticeships in the manufacturing sector. AiM brings together nine members, including the likes of Enginuity, Food and Drink Federation, and the UK Metals Council (UKMC).

All with a vision to boost apprenticeship starts amongst SMEs in the manufacturing sector.

Look out for new interventions and initiatives on how we can boost apprenticeships in the manufacturing sector to help meet the skills puzzle we face.

@MakeUKCampaigns: AiM launches on #NAW2022

“Minister for Skills and Apprenticeships @alexburghart:

“Our economy is hungry for skills, and apprenticeships are in demand. I’m delighted to announce the launch of the Apprenticeships in Manufacturing (AiM) Group, to support the growth of apprenticeships."”

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🔧 We called for Levy reforms

Our latest research shows 6 in 10 manufacturers are planning to take on an apprentice - we want to boost this number. To do that we called for a sectoral approach to boosting apprenticeship starts, this includes:

using up to 20% of levy fund on capital equipment
using up to 20% of levy funds on apprentices wages

The Government has already recognised manufacturing as a growth sector, so allowing businesses to recruit an increased number of apprentices with the flexibility to support them financially by using their excess levy funds for wages. A special targeted approach to levy funds would go a long way to allowing manufacturers to deliver even more high-wage, high-value job opportunities across the UK.

@Bhavina_B on Levy reforms during #NAW2022

“It’s #NAW2022 but what next for the Apprenticeship Levy?

I spoke to the @NewStatesman about why reforms to the Levy are long overdue.

Worth reading the full @NS_Spotlight on skills and apprenticeship for a new economy, w/contributions from @tobyperkinsmp @Miatsf @nadhimzahawi”

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Twitter was on 🔥 (as always!)

On #AskAnEmployer day the National Manufacturing Skills Taskforce brought together leading manufacturers to share why recruiting an apprentice has transformed their businesses, and why more should do the same.

💎 Key takeaway? Offering apprenticeships is challenging but incredibly rewarding. Bringing young people into the business helps us grow as a business too.

Ps. The recording should be up shortly so watch this space.

Dame Judith Hackitt kicks off the National Manufacturing Skills Taskforce Q&A session

“💥And we’re liiiiive!💥

Dame Judith Hackitt kicks off the National Manufacturing Skills Taskforce Q&A session on #AskAnEmployer day for #NAW2022.”

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And finally, on #ThankYouThursday we hosted a Next Generation Kitemark webinar to inspire more businesses to explore apprenticeships. We also gave a little shout out to the wonderful people who make the delivery of apprenticeships within businesses possible.

The Apprenticeship Best Practice programme allows businesses to learn from others who are already delivering high-quality apprenticeships, giving them the confidence to know they can do the same.

Learn more about the kitemark programme →

Make UK in Parliament

Finally, SNP Shadow Deputy Spokesperson for Europe, Peter Grant raised Make UK research on the impact of Brexit on manufacturers in parliament last week.

My hon. Friend has raised the impact that Brexit is having. Brexit has had a disastrous effect on our economy, and it has not finished. The OBR estimates that we still have three fifths of the way to go. Most of the damage from Brexit has still to be done. Every single person on these islands faces a cost of around £1,200 as a result of Brexit, and we know who will be hit the hardest. Make UK, the organisation that represents 20,000 manufacturers, has said that Brexit changes will undoubtedly add to soaring consumer costs in 2022.

As our latest research shows, it isn’t just the cost of living that is increasing, but the cost of doing business too.