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Leading Manufacturer Urges Minister to ‘Provide Level Playing Field’ for the Future of Manufacturing in the Midlands

 MG 1064In response to the announcement by the Secretary of State for Business, Innovation and Skills for the region’s businesses to get engaged so that they can work with the West Midlands Combined Authority (WMCA) and the Local Enterprise Partnership, Paul Cadman, Group MD of the Futura Group, winner of the Black Country Chamber of Commerce’s prestigious Manufacturer of the Year Award 2015, one of The Manufacturer’s 2015 Top 100 most influential people in manufacturing and proud member of the Chamber’s Platinum Group said: “Midlands Manufacturing businesses will exceed the productivity challenge provided the government recognises its role in supporting manufacturing.

“We welcome an approach based on market forces but first we need to understand the nature of the market. Under investment in the infrastructure that manufacturing needs (land, transport and skills) provides us with a strategic disadvantage compared to our competitors. I would ask that the Infrastructure Commission under Lord Adonis looks at the opportunities within the Midlands Engine as well as the Northern Powerhouse to ensure that investment is based on economic return on investment as well as political gain.

“Our energy costs are ridiculously high compared to our European counterparts, ironic considering that our supply is managed by European companies. We are not asking for more money, just a better application of green taxes and an understanding of the return of income and corporation tax from increased profits. We agree with the EEF that the Business Energy Taxation Review should scrap the Carbon Reduction Commitment with revenues recouped through the Climate Change Levy. Climate Change Agreements should remain in place for the current phase with higher discount rates to compensate for Climate Change Levy increases. Confirmation should also be given that there will be no rise in the Carbon Price Floor in 2020 and it should be scrapped as soon as fiscally possible.

“We are not asking for more money, but if our competitors are making use of existing European funding to bolster their steel industry, why can’t we? Surely any impact on the rebate will be diminished by increased trade, perhaps even in turn addressing the trade gap? Foreign government subsidies of input costs to manufactured products provides a false advantage that, if we do respond, leaves us globally uncompetitive. Manufacturing is not financial services and operates in ecological supply chains, which, if not properly understood, lead to measures to address short term gains evolving into long term irrecoverable liabilities. We produce the best manufactured products in the world but the lack of understanding of the sector by successive governments have left us struggling to compete.

“Manufacturing alone contributes three times the GVA as financial services. In the Black Country where 38% of businesses are manufacturing or related to manufacturing, the lack of understanding and appreciation of the sector has led to a deterioration of what once was ‘the engine room of the world.’ We are not talking about protectionism but those countries who espouse free trade and yet set up tariffs or logistical challenges for imports are taking advantage of our purist approach.

“Finally, we need a review of the 5 asks of the steel industry: The EU takes much longer than anyone else to impose antidumping measures: in particular the imposition of provisional measures in the EU takes at least 9 months, whereas the US takes less than 5 months, with initial decisions made in as little as 45 days.  To what extent is the Market Economy Status of China a factor in the delay in imposing antidumping measures? How much of the £60 million promised to the steel industry has actually been paid out to Energy Intensive businesses? The State Aid approval appears to have been extended but we are not convinced that the speed of compensation is adequate. Although changes to procurement guidance for programmes such as HS2 and Network Rail enables UK suppliers to bid, why has the procurement not been extended to favour home-based suppliers (a practice used by our ‘free-market’ competitors)? Current tax practice is preventing investment in new plant; machinery that could transform productivity. Class IV plant and machinery should immediately be removed from the calculation of rateable values for business rates purposes and additional safeguards should be put in place before business rates are devolved to local areas. The business tax roadmap should aim to reduce the tax wedge on employment and align tax reform with technologies that will boost productivity – these include capital allowances, business rates and the R&D tax credit. As regards Emissions Regulations exemptions, we need to fully apply without delay the existing provisions of the EU ETS (phase three) for offsetting the indirect carbon costs and review national energy costs for the sector.

“The Secretary of State for Business, Innovation and Skills has a real opportunity to create a ‘level playing field’ for the Midlands’ manufacturing sector and helping realise the £34 billion productivity shortfall. This can be achieved without impacting upon the current austerity programme. It simply requires engagement with manufacturers and a level of understanding heretofore lacking in previous governments. This is a massive opportunity to create a legacy renaissance and to put the region on the global manufacturing map for once and for all.”

Last modified on Wednesday, 02 March 2016 10:03

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