DEBATE MANUFACTURING
IN ASSOCIATION WITH:
WILL MANUFACTURING MAKE IT?
We brought our expert panel to the Walton Summit offices of Brabners solicitors, our partner on this event, to discuss the challenges facing manufacturing in Lancashire and its future prospects
PRESENT:
Richard Slater - Lancashire Business View (Chair) Roy Barry - Brabners David Gorton - PM+M
What new challenges are manufacturers facing?
RB: What challenges aren’t they facing? Before we had the turmoil of Covid, there was already concern across the board about supply chain, about infrastructure, about remaining competitive, about investment, about how you get your goods out of the country to your global markets.
The pandemic hit and crunched everything even further. Logistic firms struggling to get goods in and out of the country. Then Russia decided it would be a good idea to invade its neighbour. Add to that the under-investment in the north of England relative to the south.
NM: Looking at it positively we have been able to tap into different markets and export into Europe quite easily and quickly. Rather than having direct delivery to customers, we’ve been able to consolidate all our goods, clear them on mainland Europe and then onward ship to our customers, which has made it more efficient and cost-effective, given the global price increases of freight carriers.
It has been a complicated distribution challenge but it’s working and we have a very slick new route to our customers.
DG: There’s a process of deciding which territories are sensible to import into, because while the rules for getting into Europe should be the same everywhere, the way that individual
Christine Hart - Brabners Andrew Jack - E&R Paul Jones - Northern Automotive Alliance
territories enforce those rules is different, and the way the carriers cope with the transitioning process is different again.
So, you’re looking for the territory that has the best balance between the way they manage the rules and the way they work with the carriers, and where the best supply chains are from the UK. When it comes to finding that balance, most big businesses have done it reasonably well. They’ve achieved some level where they’ll say, ‘this works’. Many small businesses have just thought Europe’s too hard.
AJ: We export 85 per cent of what we make and supplying to Europe is a nightmare for us. We can ship a part to Germany, and it used to get there in 12 or 18 hours sometimes. Now it can take six weeks. We’re installing a large machine in Dresden and it has been a massive challenge. Brexit has not been good in this area for our business because we’re not a mass exporter.
DG: It’s a scale thing. A machine tool manufacturer I know set up a European spares distribution point because it is just not viable to move UK products. If you buy a product in Germany, bring it to the UK to build and then ship it back, you wind up paying duty when you send it back. That process is complex.
AJ: The other challenge is cashflow because the supply chain is destroyed at the moment. The wait
Nadeem Memon - Panaz Professor Allan Rennie - Lancaster University John Woodruffe - Cube Thinking
is 12 to 18 months for some parts, and I’ve never seen that in 28 years of business. We used to ship machines in nine months, we are now doubling our production time because we can’t get the parts.
It affects cashflow. We have six or seven machines we should ship this year that will be shipped next year. We’re a private business but if we were publicly listed, we’d be giving profit warnings. Next year should be fantastic because we’re shipping production into next year.
But supply chain is absolutely killing our business and eventually cash flow will catch up. As long as we’re taking new orders, which we are, it’s good, cash flow remains positive.
Our supply chain is basically computer systems and drives. A large chip factory in Asia burnt down. It had several machines that basically fed the world, from robotics to the automotive sector. The car industry just went into freefall.
This was exacerbated when Russia invaded Ukraine. Who knew Ukraine was a massive supplier of steel and automotive parts?
PJ: It just shows the fragility of the global supply chain when things like this happen. It happens in a distant country and you think, ‘it won’t have an impact on us’, but it does.
Continued on page 20
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