VIEWFROMTHE EU
manufacTure Time To By Jon Barrett, Electronics Sourcing
A couple of years ago I attended a seminar on business growth. The presenter, an experienced and successful businessman, made a point of highlighting the profitability of knowledge-based businesses compared withmanufacturing companies. I subsequently discovered that the presenter had at least two businesses, one a knowledge-based consultancy, the other, you’ve guessed it, amanufacturing company. Strange?
Actually not so strange inmymind.Margins inmanufacturing
might be lower due to capital investment, rawmaterial and labour costs. However, if the product appeals to a large enough audience, anymanufacturing line canmake seriousmoney. I recall visiting onemanufacturing business somemonths ago where themanaging director hadmonitors on the wall of his office showing each of his production lines. His comment stuck withme: ‘Whenmy staff turn on the lines and I see the products exit the conveyor I can visualise themoney flowing intomy bank account. The faster the lines go themoremoney Imake’. Nice!
Likewise,manufacturing offers serious advantages over the
service sector which was always hailed as the saviour of the UK economy. For example, if tourists decide to stop visiting a certain part of the country due to reasons beyond their control it is rather difficult for hotels and restaurants to relocate to alternative towns and counties. No such problemfor manufacturers, if sales dip in a certain region it is relatively easy to employ distributors in new untapped areas. It pays to appreciate the benefits of themobility ofmanufactured goods.
So, where is this discussion taking us.Well, in a couple of
months, two significant UK events will collide. Firstly, the UK government will announce its departmental spending plans with cuts expected between 25 and 40%. Secondly, the new higher VAT rate will be applied. Two opposingmoves designed to simultaneously reduce government spending and increase tax
revenue. Looking at the long game, when this process is complete the country’s finances will be inmuch better shape. The secret is how to get there.
If I had tomake a
list of businesses that I would prefer to be working for during this period, surely a manufacturer of high value added electronic products with a global customer base would be high on the list.What would the other hallmarks of such a company?Well, it would need to design reliable, attractive and affordable products. It would need to purchase components and services efficiently and cost effectively. It would need tomanufacture products to world class quality standards. Finally, it would need an effective global sales channels. Luckily I visit UK-basedmanufacturing business that do all of this andmore.
The time has come to respect their role and support them every way we can.
Jon Barrett is editor of ESNA’s sister publications in the U.K., Ireland and Europe
www.electronics-sourcing.co.uk www.electronics-sourcing.eu
September 2010 | 43
Jon Barrett, editor of ESNA’s sister publications in the U.K., Ireland and Europe
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