Don’t mark time – make use of it. Business uncertainty and manufacturing
Amid all the hot air and uncertainties of Brexit, one thing is clear; February’s Bank of England (BoE) inflation report shows that global trade winds are buffeting economic activity. The growth in world trade in goods reduced from 5% to 3% in the three months to November 2018 and a slowing of activity in the Eurozone (and between the US and China) even led German economic output to contract. This sluggish growth has also dampened the paths of interest rates, whose planned trajectories across the US, UK and the Euro area have all flattened.
UK private businesses remain remarkably pragmatic, however.
Although UK business investment has effectively stalled since the result of the referendum (BoE figures showing it fell for three consecutive quarters last year) the UK economy and employment have continued to grow, albeit more slowly. At 4% unemployment we are effectively at full employment: it seems that UK private businesses have chosen to retain their flexibility and agility in the face of these trade winds with investment in people, rather than technology. Therein also lies one of the principal causes of lowered UK productivity.
Not only that, but a BoE survey has shown that just 28% of companies have contingency plans in place – with another 17% still developing their plans for the end of March 2019.
More than 33% of companies surveyed by the BoE have already started implementing contingency plans – and it’s highly likely that most of these are manufacturers or transport companies, whose trade in physical goods makes this a high priority.
If you, or your suppliers import or export, three priorities are clear:
- Get a UK Economic Operator Registration and Identification (EORI) number so you can continue to import or export goods and apply for authorisations that will make customs processes easier for you.
- Decide if you want to hire an import-export agent, or make the declarations yourself.
- Contact your hauliers to find out what information they need to make the declarations for your goods, or if you will need to make them yourself.
Whatever the business context, make plans – not excuses
Our own Going for Growth survey of 530 entrepreneurial businesses, released late last year, showed that over 60% of UK manufacturing businesses had developed contingency plans for this year.
It also showed that the principal growth strategy for the next three years, whatever the context, will be via investing in new technology. Manufacturing and transport businesses seem much more likely than the average (at 37% and 40% respectively vs 34%) to be preparing to invest in technology upgrades.
Yet with low unemployment, low productivity and marked business uncertainty, perhaps the best immediate strategy is to invest in the skills development of your people. After all, the speed of any technology uptake – and its benefits – will be defined by the skills of its operators – and your employees will face the future with increased confidence.
Now is also the time to investigate broadening your business horizons. While 35% of private businesses in our survey had never considered exporting or expanding abroad, the majority of these had not actively investigated the advice available to access these markets, either from the Department for International Trade (DIT) or their financial or legal advisers.
Later in 2019 Kreston Reeves will be running workshops with the DIT for companies looking to build their international business, email us at email@example.com if you would like to register your interest in attending one of these workshops.
If you are thinking of trading internationally – or of setting up an establishment abroad, do contact us here or call us on +44 (0)330 124 1399, either for advice or to access our international network.
For access to the DIT advice site click here.
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