JANUARY 2020 COVER STORY
Investment plans over the next 12 months
Percentage of businesses
with the following plans 2017 2018 2019
Hiring new sta 86% 81% 47%
Product development 78% 76% 39%
Purchasing new equipment 72% 69% 32%
Expansion in the UK 56% 60% 28%
Expansion abroad 40% 69% 27%
Moving to new premises 37% 39% 14%
However, in a post-Brexit
world, forging trade deals with
countries like the USA will
be valuable, and should be at
the top of the agenda for the
government. Scuoler is adamant
that any deal should be grasped
with both hands. “Regarding a
US/UK free trade deal, be under
no illusions, it will be slanted
towards US interests, just by
the sheer weight population and
industrial size. Nonetheless,
any reasonable deal with the US
would still be very attractive.”
However, it would be a
dangerous move to try and ‘ride
out’ the storm, warns Scuoler.
Now is the time to be investing
and showing confi dence, as
those companies that do can be
richly rewarded. “Our current
economic growth and projected
growth for 2020 outstrips many
of the 27 EU countries that
are not leaving the European
market,” he says. “An important
message I’d like to give to those
companies out there who are not
investing is that those that invest
“British businesses must not, in
any way, shape or form, turn
away from the EU market”
Terry Scuoler, chairman, Institute of Export & International Trade
the need to seek UK suppliers is clearly evident.
For AGM Batteries, onshoring is a viable option,
due to the nature of the market it operates in.
Brundish points out that any decision to move all
supply to the UK is unlikely to be Brexit-related.
“As a company, we’re agnostic to Brexit because
it’s a people vs Parliament thing,” says Brundish.
“The uncertainty works towards an onshore
market environment which is a positive benefi t for
manufacturers, so it’s not all negative news. On the
fl ip side to that is the export and import of supply
chain. In either scenario we can still thrive as a
business because we’ve got a very strong market
and we got some leading products.”
Tata’s Fox explains that there are more reasons
for reshoring supply chain to the UK. “The
tsunami in Japan in 2011 shone a light on the
risks posed to the supply chain in bringing
critical parts from a long way away,”
she says. “That event caused some
in the automotive sector to look at
bringing supply chains closer to
their plants in Europe. I wouldn’t say
that the ultimate solution is to all
become little island economies that
are entirely self-suffi cient. However,
before thinking about off shoring and
moving supply chains overseas, you have
to think about the wider impacts of doing
that. There should be a future for a more vibrant
manufacturing sector in UK – but not at the
exclusion of global supply chains. We’ve become
more of a service-based economy than we were
previously, and I’m worried that there will be a
tipping point where we lose the manufacturing
capability in the UK.”
The impact of tari s
Contrary to Fox’s advice, across the Atlantic,
Donald Trump has been pursuing an ‘America
fi rst’ economic policy since the start of his
presidency in 2016. He promised to protect
American manufacturing by imposing hefty tariff s
on goods imported from other countries, starting
with non-US solar panels and washing machines.
This has sparked a trade war between the US and
China, in particular.
Terry Scuoler, a former chief executive of
EEF (now Make UK) and now chairman of the
Institute of Export and International Trade,
says that if this continues, it has the potential to
aff ect companies across the world. “The World
Trade Organisation has estimated if the current
malaise and impasse between the US and China
continues, it will take £700 billion out of the
volume of world trade in 2020 alone. Clearly it is
going to impact signifi cantly on the volume and
levels of world trade. And, without a doubt, those
tariff s are going to impact upon those companies
in those sectors that they apply to. I only hope
that common sense will prevail here. Something
like scotch whisky subject to a 25% tariff is an
inelastic market, but automotive and steel are not.
There will be signifi cant repercussions
for British businesses if this is not resolved.”
Scuoler has more advice for
Westminster. “British businesses
must not in any way shape or
form, turn away from the EU
market, which will continue
to be a massive, massive trade
opportunity for this country,” he
says. “As a result, what British
businesses want most of all in
the next 12 months is a trade
deal with the EU. Failing that I
think British businesses would
welcome a two-year extension
to the transition period, and on
the back of that a trade deal with
the EU. In tandem with that,
the rollover of the existing free
trade agreements that the EU
has with the rest of the world
would be most welcome. This is
a challenge, though, and there is
a risk of that not happening. If
that’s the case, British businesses
should still prepare themselves
for a hard Brexit.”
in a downturn and companies
that invest counter-cyclically
will reap the rewards of the
future. Yes, there’s uncertainty
- there’s always uncertainty -
but they really need to invest
and get on with investing for
the future, because there will
always be a future.”
What 2020 has in store,
politically and economically,
remains to be seen. However,
the election result and a
potential end to the Brexit
uncertainty may fi nally see
manufacturers – and the
economy as a whole – take the
handbrake off . It’s the job of
the manufacturing sector, and
strong, UK-based companies
of all sizes to take the lead,
creating wealth for the nation.
If this can be achieved, the rest
– trade deals, export orders
and the like – will follow suit.
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