A great place to manufacture

"Manufacturing is leading the way out of the trough we fell into and is the part of the economy that is taking us forward," Simon Pollard told the audience. The crash, which was not of the manufacturing sector's making, "hit our sector hard". Even before recent good news to this effect – that manufacturing grew three times faster than the economy as a whole in the last quarter of 2010 – Mr Pollard noted that last year's biennial exhibition, MACH, had "put a smile back on faces and salesmen back on the road, taking orders". He also noted that the exhibition drew government big hitters – business secretary Vince Cable and his deputy Mark Prisk – and he believed that "they were impressed by what they saw and, I think, the arguments that the MTA put to them. I believe that they get it; manufacturing matters, and the UK is a great place to manufacture." But he was keen not to oversell the message, acknowledging that the UK is not suddenly going to rise to be, once again, "the workshop of the world", but he is convinced that "there is more afoot than just a reappraisal". And he added that he knew of companies in the room at the ICC Birmingham event that had repatriated work to the UK and who had invested substantial sums in manufacturing technology, "because they believe they can make the best of modern manufactured goods in this country". And they need the very best equipment, because the competition is out there, much of it coming from countries that barely registered with us a few years ago, the MTA president acknowledged. It's a challenge and an opportunity, but "our history as a trading nation, with global links, will stand us in good stead, allowing us to engage with new markets and carve out new niches as the emerging markets come into their own". But UK manufacturers require the best manufacturing technology, amongst other things, to succeed, and he returned to matters of tax and investment to push home a message ahead of the Budget. Mr Pollard noted that the UK's record on investment is not good; and that was because, in comparison to other countries, the financial support is not there. "We are fighting in a global market with one hand tied behind our back. Our tax system is not properly designed for manufacturing." An annual allowance of £100,000 is "simply not adequate for any company in advanced manufacturing." The present rate of write-down thereafter is also lower than in competitor economies, and the situation will only get less appropriate as equipment develops and its competitive life-span decreases, he added. "The Government plans to cut the annual investment allowance to £25,000 and capital allowance write-down to 18% will, if implemented next year, substantially worsen the position of advanced manufacturing. Action on that would be a substantial step forward and we will keep pressing the case." The argument that good companies will invest anyway misses the point; it's about competitiveness and the UK system places UK companies at a disadvantage, the MTA president offered. As for the banks: "Wouldn't it be good if they turned their hand from financial engineering to finance for engineering." He added that the MTA is working with Government and banks to help them understand the needs of manufacturing, in particular the importance of asset value, but he concluded by saying that the MTA will work broadly to make sure that the UK remains "a great place to manufacture". *MTA – visit www.mta.org.uk **Simon Pollard is managing director of Kyal Machine Tools First published in Machinery, April 2011