Fenner boss in call for more sector support

Instead, if the Government is serious about rebalancing the economy away from financial services towards exports, it has to turn business-friendly rhetoric into action, according to the chairman of Fenner, the conveyer belt maker.

The FTSE-250 company is one of Yorkshire’s most successful engineering businesses. Its chairman, Mark Abrahams, has been a strong advocate for UK manufacturing and, following last month’s Budget, has repeated calls for more to be done to support the sector.

“To be successful at manufacturing, for the most part, you have to be globally competitive, which in the modern age is quite challenging,” he said in an interview with the Yorkshire Post to mark his recent move from chief executive to chairman.

“You do it by investment, by taking sensible long-term decisions and by having consistent but responsive management. It needs the environment in which you can do that. It needs stability. It needs an environment in which investment is encouraged. It needs something where bureaucracy does not get in the way.

“We have a Government which recognises that bureaucracy is an issue. To a large extent, I give credit that it has not got worse, but equally it has not got better fast enough.”

The March 23 Budget contained some measures designed to help manufacturing, including improved export credit schemes, increased research and development tax credits and enhanced capital allowances.

“There’s a lot of talk about Britain being open for business. The words are fine, now the action has to follow and it has to follow quickly,” said Mr Abrahams.

“They have to do it in a consistent way over many years. So far so good, but we need more than words.”

For example, business organisations estimate that incoming employment legislation will cost Yorkshire companies more than £1.6bn over the next four years, on top of existing costs for coping with red tape.

As an example of the increased burden over the last decade, Mr Abrahams said: “A typical Fenner plant in the UK has probably got three or four extra people simply handling all the extra bureaucracy. Something needs to be done to unshackle that and to encourage the investment.”

Mr Abrahams spoke with frustration at the level of bureaucracy faced by UK businesses that foreign competitors do not have to contend with.

He added that the UK has made retrograde steps in capital gains tax, which is stifling investment at a time when the country should be taking maximum advantage of sterling devaluation.

Hessle-based Fenner, which serves international markets, has emerged strongly from the recession, as customers build up their stock inventories and booming Asian economies increase demand for its products.

Last year, it reported a 49 per cent increase in underlying pre-tax profits to £46.3m, lifting sales by 11 per cent to £552.5m.

Without his good, loyal workforce in Yorkshire, Mr Abrahams claimed he would relocate the business “like a shot”. In a hard-hitting verdict, he said UK manufacturers with global customers are in a “cost-uncompetitive” location because of bureaucracy and congestion, on top of the costs of being an island.

“The only way we can offset it is to balance it, to help with infrastructure as much as possible, to take away unnecessary bureaucracy and create investment incentives and keep labour laws as flexible as possible.”

The UK has historically enjoyed a competitive advantage from its labour laws, but “bit by bit the directives come in”, he said, claiming that adherence to EU law, such as limited working hours, is eroding any benefits. “It’s the flexibility of working here that manufacturing needs,” he added.

“Manufacturing stands at a crossroads now,” he said. “It has a wonderful opportunity to start growing again in this country, significantly, but we have got to free up and take the shackles away, take the tax burden and admin and create investment in the industry. It will then happen.”

Mr Abrahams has good experience of turnaround situations. When he became chief executive of Fenner in 1994, the company was loss-making. He changed the management team – which he describes as the greatest challenge of his career – and refocused the company on new markets.

The formula for success

mark Abrahams spent 20 years creating Fenner’s philosophy. He will be in a good position to see that it is adhered to, after becoming chairman last month.

Mr Abrahams said the philosophy “has been to devolve responsibility and autonomy to foster entrepreneurialism because if you have got the right people in the right position and you give them the freedom to operate with sensible guidance and control then that’s the best formula for global growth”.

He credits this approach for the company’s success in tough international markets. The 56-year-old Cambridge maths graduate revealed that he has one unfulfilled ambition – to lead a FTSE-100 company.