Yorkshire Post Business Barometer: British economy 'needs long-term strategy to boost manufacturing'

THE UK needs a 25-year plan to support the manufacturing industry to help grow the economy, according to a leading Yorkshire manufacturer.

Chris Rea, managing director of Rotherham-based manufacturer AESSEAL, speaking at an event to discuss the Yorkshire Post Business Barometer, described the outlook for UK manufacturing as "depressing" because he said there is no understanding of how to develop the industry.

He said: "If it takes three years to organise any major change in the business, it will take 25 years for a country to plan to actually have a manufacturing base.

"The three (political parties) should get together and have cross-party support for a 25-year plan that doesn't even need money, it needs an understanding that manufacturing matters."

Kevin Cunningham, head of corporate at Irwin Mitchell, said: "A good route to go is an export-led recovery. We should be investing in manufacturing."

Gary Lumby, president of the Leeds and North Yorkshire Chamber of Commerce and director of small business banking at Yorkshire Bank, added: "The vast majority of SMEs don't know how to export and there is a great danger in that we over-rely on one or two success stories and forget about the others who don't know how to go about it."

Master Cutler James Newman described the changes in corporation tax and capital allowances announced by the Government at the Emergency Budget as a "waste of time" in the present environment. He said: "You need to get the investment flowing first and then when people are making profits from those investments you can start fiddling around with the tax. If they are not making any money it's a waste of time changing the tax."

Research showed that nearly half of businesses will focus on reducing operating costs in the next three to six months, reflected by the mood of caution at the roundtable.

Helen West, chief executive of Business Link, said: "Businesses want to move forward but they aren't clear what the best thing to do is."

Anne McIntosh, Conservative MP for Thirsk and Malton, said the Government should leave businesses alone to grow.

She added: "My personal view is that the Government should not get in businesses' way. We should be there to facilitate wherever possible but not actually stand in your path when you're trying to do business abroad."

However, Labour MP Rosie Winterton warned that Ministers must take a more proactive approach to boost the economy.

She said: "I believe that government does have to be interventionist during the downturn to help the private sector.

"You have to have a very clear strategy for industrial activism. You need a regional strategic level to do that."

Ms Winterton added that cancelling the 80m loan to Sheffield Forgemasters sent "totally the wrong message" about the Government support for manufacturing and was a "blow" to Yorkshire and the Humber.

She said: "Our major export market at the moment is in a mess and so, therefore, that's why in my view you need to be much more interventionist." Research showed that only a fifth of companies plan to increase investment in research and development over the next six months.

Barry Dodd, chairman of Wetherby-based engineering group GSM, said: "The problem is that in a recession, it's one of the things you can cut and it doesn't show. That's the danger." Steve Pluta, head of solutions architects at O2, said: "We continue to invest and it rises slowly every year. We see it as significant because the market is changing for us."

Eighty two per cent of those surveyed said that their investment in research and development had not changed in the past 12 to 18 months and 81 per cent predicted it will not change in the next 12 to 18 months.

According to the survey, 71 per cent of companies said skills and training is a priority but only 30 per cent say they are going to do anything about it. In addition, only 25 per cent of companies have strong links with local universities when it comes to boosting the skills of their workforce.

Master Cutler James Newman said: "I think the universities aren't doing enough to have links with businesses because there is still a certain amount of confusion over who pays for what. Only the companies that can afford it are going to go to the universities."

LIST OF DELEGATES

Malcolm Cowing, managing partner of Leeds-based marketing agency Brass, formerly known as Brahm

Gary Lumby, president of the Leeds and North Yorkshire Chamber of Commerce and director of small business banking at Yorkshire Bank

Anne McIntosh, Conservative MP for Thirsk and Malton

Barry Dodd, chairman of Wetherby-based engineering group GSM and board member at Yorkshire Forward

Kevin Cunningham, head of corporate at Irwin Mitchell

Carl Lapworth, operations director Leeds Bradford International Airport

Steve Pluta, head of solutions architects at O2

Chris Rea, managing director of manufacturer AESSEAL

Michael Longden, national head of public sector at Irwin Mitchell

Rosie Winterton, Labour MP for Doncaster Central and former Yorkshire Minister

Helen West, chief executive Business Link Yorkshire

James Newman, Master Cutler and chairman of Finance Yorkshire.

Quality law services right on the doorstep

Nick Bates

As a major business with its roots and head office in Yorkshire, Irwin Mitchell is pleased to be the lead sponsor of the Yorkshire Post Business Barometer survey undertaken by Brass – formerly Brahm – as we are keen to learn more about the issues facing businesses in our region.

The results are very encouraging too.

The survey shows that of the businesses surveyed – of which 20 per cent have more than 100 employees – and which span all business sectors, only one per cent indicated that their businesses use legal services outside Yorkshire.

This means that most Yorkshire businesses are buying their legal services regionally rather than feeling the need to counsel London-based lawyers. This may be to do with competitive fees but also means they can find the quality and breadth of service they need right here.

While we are thankful to the 99 per cent of Yorkshire businesses using local services, on behalf of the Yorkshire legal market, Irwin Mitchell is challenging the final one per cent to contact us and allow us to demonstrate how all your requirements can be dealt with conveniently, proactively and cost-effectively right here in this region.

While half of business owners and directors thought that the financial performance of their businesses had worsened in the last 12 to 18 months and a third expressed dissatisfaction with the support available from banks, only five per cent expressed any dissatisfaction with their lawyers.

We are immensely proud that the legal market in Yorkshire is being recognised for the high quality work being carried out.

Ideally we at Irwin Mitchell would like this number to be zero per cent, but this does imply that we are broadly succeeding in engaging with businesses. We can also take heart that firms like ours that have developed and grown in Yorkshire are being recognised.

Nick Bates is a corporate litigation partner at Irwin Mitchell.

Companies must take care when handling potential job losses

Glenn Hayes

The Yorkshire Post Business Barometer highlights that only 31 per cent of those surveyed recorded improved performance – in difficult economic times this is hardly surprising.

However, with no strong dependence on any particular sector in Yorkshire, there are thankfully few horror stories of late where mass redundancies or lay-offs are taking place.

While the future may be brighter – with 45 per cent of those surveyed predicting that their financial performance will improve within the next 12 to 18 months – the legacy of what is left behind continues in the employment sphere. There are significant and ongoing consequences for businesses in national markets as a whole from which Yorkshire is no exception.

According to the latest Tribunal Statistics Report for 2009/2010, there was a 56 per cent increase year on year in the number of claims accepted by the Employment Tribunals Service, with figures being at their highest levels ever. Although these are national figures, Yorkshire is not exempt from this rise.

The survey highlights that despite an improving economic landscape for our region, 49 per cent of those surveyed would continue to reduce operating costs where necessary over the next three to six months.

Nationally, 17 per cent of claims are associated with unfair dismissal, breach of contract and redundancy. This is something that Yorkshire businesses will have to watch out for.

There was also a significant drop in the number of Employment Tribunal claims in which the hearing took place within 26 weeks of the claim being received, falling from 74 per cent to 65 per cent. This is a direct result of the number of claims having increased and also due to the number of claims not settling prior to tribunal as was previously the case.

Multiple claims in the tribunal system have contributed to the overall increase in the numbers of claims. As well as an increase in claims being brought regarding redundancy proceedings, there are additional claims such as unfair dismissal on grounds of age or sex.

While the survey indicates improvement in the Yorkshire market, businesses in the region would be well advised to consider the implications of managing their workforce both during employment, and when terminating an individual's employment. They need to ensure they stay within the confines of the law and do not find themselves waiting to defend Employment Tribunal claims in, what is currently, an overloaded system.

Glenn Hayes is an employment partner at Irwin Mitchell.

A clear picture is needed regarding pension liabilities and future risks

Nigel Bolton

Yorkshire businesses face a long wait before the Government finalises its position in relation to both private and public sector pensions.

Until the policies are finalised, a steady drip of changes are being announced. Any business with a final salary scheme will be pleased to hear plans to switch the inflation index from the retail prices index to the consumer prices index.

The switch could lead to savings of between 50bn and 100bn for businesses, with five million final salary scheme members losing up to 10 per cent of their pensions' value over their lifetime. Equally popular with business leaders will be the Government's commitment to review the enormous amount of legislation surrounding pensions.

Likely to be less popular is the announcement that the default retirement age of 65 may be removed.

The Government is also due to report back in October what will happen with regards to the National Employment Savings Trust (NEST).

This was a national pension scheme applying to any

business, with auto-enrolment and mandatory employer contributions.

It is uncertain whether it will continue as planned or if the scheme will continue at all.

However, with less than two years to go until its implementation, research shows that only 20 per cent of regional business leaders are prepared for NEST, meaning a significant communication exercise will need to be undertaken by the coalition.

The long-term outlook where public sector is concerned is far less sunny; not only have 25 per cent cuts in public sector expenditure been announced, the Government has also launched an independent commission on public sector pensions with a 50,000 cap on pensionable salary.

In the Local Government Pension Scheme alone, there are now 7,000 private businesses and third sector organisations that are likely to suffer not only from the direct effect of the budget cuts, but also from retirement age increases, reduced benefits, and potential increases to both employees' and employers' contributions. Those businesses would then be at a severe disadvantage with regards to cash flow.

Now is the time for these and other Yorkshire businesses to

get a clear picture of what their pension liabilities are and what the likely risks are for the future to make sure there is an appropriate plan in place in the short to medium term.

Nigel Bolton is an associate in the pensions team at Irwin Mitchell.