Manufacturing Archives - 4th Dimension

Supply chain management is critical to successfully navigating the UK’s exit from the EU.

Much has been made of Brexit’s impact on British exports, but ‘Made in Britain’ relies heavily on our ability to import. Almost half of the UK’s £736bn imports are goods that make up part of a final product, and nearly half those so-called ‘intermediary goods’ come from the EU.

This is already having an impact on supply chains. Mckinsey interviewed 50 UK executives whose companies make everything from face creams to fenders to fettuccine, and found deep concern about the near-term uncertainty and impact of Brexit.

Food manufacturers worry that their goods will spoil while being held up at borders, and almost everyone is grappling with the uncertainty of higher tax duties if the UK leaves the EU and reverts to most-favoured nation status under WTO rules. It’s not just UK and EU products that are affected, however, many intermediary products that come to the UK are from countries that have a free trade agreement with the EU.

OPINION: Productivity growth depends on industrial investment, which demands an active approach to the national currency, argues JML founder John Mills.

Productivity growth in the UK economy is almost non-existent. Many people find this fact puzzling. However, there’s a simple reason why, and there’s a relatively simple solution too – if only we can bring ourselves to face up to it.

If we want to rebalance our economy, and get our productivity up, we need to make manufacturing profitable again. We need to create the conditions whereby it makes sense to site new manufacturing facilities in the UK instead of China or Germany or Holland.

But to do this, we need a much lower exchange rate. This would make the prices we charge for goods to be sold to world markets much more competitive. We might not all agree with this strategy but it is the only way we are ever going to crack the UK productivity puzzle.

The UK’s low productivity is the result of two factors. Economic growth stems very largely from investment. Currently, we invest a very small proportion of our national income compared to most other countries, and what we do invest in produces very small returns.

Posts

How Brexit will impact products that are ‘made in Britain’

The UK needs a manufacturing resurgence – and a weak pound

OPINION: Productivity growth depends on industrial investment, which demands an active approach to the national currency, argues JML founder John Mills.