Boom times, but what does manufacturing need now?

Sep 14 2007 by Francesca Craggs, The Journal

IWOULD not like to be Mervyn King at the moment. In his role as governor of the Bank of England he must reflect on a quiet afternoon in the Bank about whether he wants the hassle of managing the financial turmoil that is spinning out of the crisis in the world stock markets.

The big question is whether these financial developments are going to spill over into the real economy. My guess is it is inevitable that there will be some impact on the economic performance of the UK and elsewhere. The least it is going to mean is that the cost of money is going up, even for a matter of months, but possibly longer.

Against this background, Mervyn King could even be contemplating whether to return to the more settled world of academia, where I understand he was an outstanding scholar and a skilled lecturer in economics. It is so much more peaceable teaching others about the business cycle than to have to do the job yourself.

In terms of doing, we certainly are in the middle of exactly that in the manufacturing businesses in this region. In my 28 years with EEF I cannot recall such a solid two-year boom period for manufacturers in our region. It is even better than this in that this region is outperforming other parts of the UK that are experiencing some of the same buoyancy.

The manufacturers I am talking to are sharing with me information on their full order books, their forward order load, their inability to secure skilled staff and the fact that they are making money.

Among the many issues facing these high-performing businesses, skills is the one that seems to be at the top of the agenda. There are constraints on growth for these companies because they cannot land the skilled staff so many of them badly need.

You may say the sector has not done all it should in terms of its image. Perhaps I would agree with you, but we are where we are.

I think the time is right to look at some strategic interventions in the sector that would help our manufacturing base to handle some of these issues across the region.

I believe it would assist these companies if they had some excellent up-to-date market intelligence information that tells them the true position on skills and skills shortages. I also believe that some machinery to help these companies with design and innovation would add further value.

There could be interventions around management and leadership, energy efficiency, productivity improvement and some high-level input around markets and winning new busi- ness.

These companies I am describing are doing well, but I know that many of them could do better. This has to be seized with both hands when One NorthEast and others are so keen to see the economic health of our region improved beyond the recent successes we have been enjoying.

I have no doubt that with the short-term demand for skills, businesses will be forced not just to look at skilled production workers from Eastern Europe, but also to consider recruiting skilled professional staff from these new and emerging European economies.

So let’s enjoy these good times while they are around. In the meantime, it is for myself and others to have the dialogue with agencies in the region about how we square the circle of a huge demand for skills and the working population of the North-East simply not being able to meet the current demand.

Alan Hall is director of EEF