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Brexit, Trump & Industrial Strategy: Interview with Paul Cadman

Paul CadmanOver the last month we have seen some big news items worldwide. We are continuing our interview with one of the region’s top manufacturers, Paul Cadman on some of these issues and how they impact upon manufacturing and on local businesses.

We now know more about the process behind Brexit
Yes, the process we go through to trigger Article 50 of the Lisbon Treaty which became law in December 2009. The Treaty is designed to make the EU ‘more democratic, more transparent and more efficient’ and is an agreement signed by the heads of state and governments of countries that are EU members. Triggering Article 50, which is a formal notification of the intention to withdraw, starts the process. After that, the Treaties that govern membership no longer apply to Britain. The terms of exit will be negotiated between Britain’s 27 counterparts, and each will have a veto over the conditions. It will also be subject to ratification in individual national parliaments. Our Prime Minister wants to officially leave the EU by April 2019 which means that Article 50 will have to be triggered by March 2017 at the latest and we now know that Parliament will have to approve and that a very short bill has been drafted to enable the approval. MPs only have 5 days to debate this very important issue.

How does the inauguration of President Trump fit into the Brexit conversation?
Until we leave the EU, we are bound by its rules which mean that we cannot set our own trade agreements. Trump seems eager to do business with the UK which is a very good thing. We need to ensure that our manufactured goods are not subjected to tariffs, the US market being heavily protectionist. However, I get a sense that any future trade arrangements will be more about the UK being able to access US financial markets and the US being able to access our agricultural, pharmaceutical, education, health and welfare markets.

We do have a positive trade balance with the US for goods of £1.4 billion (compared to a negative trade balance with Germany of £3 billion). Our services trade with the US in Q3 2016 was nearly £7 billion. With the EU it was almost £10 billion.

We need to export more manufactured goods: according to the Office of National Statistics (November 2016) the UK’s deficit on trade in goods and services was estimated to have been £4.2 billion in November 2016 compared to £1.6 billion in October 2016. This £2.6 billion difference reflects a £3.3 billion increase in imports, partially offset by a £0.7 billion increase in exports. The widening of the deficit is attributed to trade in goods in which there were increased imports from both EU and non-EU countries, partially offset by an increase in exports to EU countries. The main cause of the widening monthly deficit for trade in goods was a widening of the deficit for both semi-manufactures and finished manufactures.

What is your take on the government’s Industrial Strategy?
The Government has published its ten pillars supporting the Industrial Strategy. It is a good step forward. When every other country in the world is intervening to support their local industries, it is good to see that our government may have decided to do the same. 80% of local businesses say that the biggest barrier to their business growth is the lack of skilled people. There is great concern that our education system is failing to produce the kind of people businesses need. In 2015 over 70% of business leaders in the area said that school leavers were not fit for work. Having schools compete with Technical Colleges over the selection 14 year-olds is resulting in an inadequate supply of skilled young people. I worry that immigration rules post Brexit will impose the same restrictions on EU workers as it has on skilled workers from the rest of the world. This is a critical issue for the Prime Minister to address. The West Midlands continues to outperform the national economy bolstered by the performance of manufacturing which makes up nearly 40% of the regional economy when associated services are included. The UK depends upon the prowess of the West Midlands and this needs to be recognised and supported in the Industrial Strategy.

It is difficult to argue with the ten pillars, but I am comparing it to the eight point productivity plan that Osborne introduced when he was Chancellor, which now seems to have been dropped. They are all worthy but we, as business people, need to hold our representatives to account for delivering benefits to our manufacturing base and not just rely on Foreign Direct Investment. At a time when all branches of government, including those responsible for trade, are being depleted of resources, the Prime Minister is either announcing a significant turnaround or will, like her predecessors, be letting us down again. 

The Manufacturer published an Annual Report for 2017. What’s in it?
Firstly I want to say that it is an excellent report. It looks ahead at themes I have talked about at previous interviews such as Industry 4.0 and servitization. Technology will enable us to create ‘smart components:’ ones that can interact with us as suppliers, our customers and the end users themselves through mobile phones or tablets. Properly connected manufacturers can get a huge am9unt of information on the performance of their products and that information has real value. 44% of businesses surveyed in the report say they are beginners when it comes to servitization and two-thirds say they are aware of Industry 4.0. I am setting up a lobbying and business support group (called manufacturing Matters) to work with organisations like The Manufacturer and Chambers of Commerce to ensure that our manufacturers take full advantage of what connectivity has to offer.

What you say to local business leaders in this area?
I think it is time to stand up and be counted. Around here we represent a microcosm of regional and national manufacturing and associated services. We need to shape the Industrial Strategy so it better fits our needs and the consultation associated with it can be found using the link below. My good friend, and a supporter of our manufacturers, Rachel Eade contributed oral evidence to the House of Commons Committee in October.  I will be responding to the consultation through Manufacturing Matters so if you have any thoughts, please let me know. I am happy to come out and see you. You can see Rachel’s evidence on my LinkedIn.

A final word: it is now less than 100 days until we are able to vote for the first Metro Mayor for the West Midlands Metropolitan area, something that could help us shape our future success, I am asking businesses to tell me what they want from the Mayor and my survey can be found using this link:

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