EEF submits views to Lord Heseltine review of government and growth | Entries are now open for the EEF Future Manufacturing Awards 2012 | EEF meets with the Environmental Audit Committee | Has your company struggled to bid for MOD contracts? Let us know. | Weekly Focus – EEF’s Susanne Baker talks about the REACH regulations and what manufacturers can do to prepare | In the news | Week in review | The week ahead
EEF submits views to Lord Heseltine review of government and growth
This week we met with former Deputy Prime Minister, Lord Heseltine, who, at the behest of the Chancellor, is leading an independent review into the capacity of government to deliver pro-growth policies and interact with the private sector. Lord Heseltine is looking at a wide-range of issues and our discussions touched on, amongst other things, the effectiveness of the machinery of government and our concerns about a lack of long-term strategic thinking and coordination between Departments. The review will report in the Autumn and you can find out more here http://www.bis.gov.uk/heseltine-review.
For more information please contact Steve Coventry, Head of Government Affairs
Entries are now open for the EEF Future Manufacturing Awards 2012
Now in its fourth year, the EEF Future Manufacturing Awards is Britain's biggest and most prestigious manufacturing awards programme. Once again, we are celebrating the innovation, dedication and hard work of manufacturers large and small with the manufacturing business awards that recognise achievement across the board. Don't miss your chance to stand out from your competitors!
Contact Rachael Moss for information on award categories and advice on how to enter - phone 020 7654 1540, email email@example.com or visit www.eef.org.uk/awards/
EEF meets with the Environmental Audit Committee
This week EEF’s climate and environment policy team met with the Environmental Audit Committee to discuss our recent reports Green and Growth: Solutions for Growing a Green Economy, and our critique of Defra’s waste strategy. We also discussed our key “green” Budget issues, including our concerns with the Carbon Floor Tax and the future of the CRC Energy Efficiency Scheme. We have agreed to stay in contact and work much closer in future.
For more information please contact Gareth Stace, Head of Climate and Environment Policy
Has your company struggled to bid for MOD contracts? Let us know.
The Ministry of Defence is interested in hearing from SMEs that have considered bidding for defence contracts – either directly from the MoD or via large prime contractors – but have been put off because the contracts contain a clause requiring them to accept unlimited liability. There is a concern that some companies are being put off competing for contracts because of this cause. For the MoD to drop the requirement for unlimited liability clauses in contracts it must be able to demonstrate that there is a value for money case in doing so e.g. companies are being put off bidding therefore the MoD may not be securing the best price on their contracts.
If you are interested in discussing this further, please contact Andrew Johnson, Senior Economist.
EEF’s Susanne Baker talks about the REACH regulations and what manufacturers can do to prepare
EEF has often highlighted the need for a new approach to regulation from Brussels that is simpler, more proportionate and takes account of the pressures facing business. A classic example of how not to do it is the EU’s chemical regime – REACH which requires industry to register the chemicals and other hazardous substances it uses.
Manufacturers support the aims of REACH, the EU's chemical regime. We need to make sure that the products we make and the formulations we use in their production are safe to our staff, to human health and the environment when they are used. Yet the approach taken by Europe to realise this ambition is complex, costly and full of uncertainty. Some of the processes are so unwieldy, so out of touch with business, that they fundamentally threaten the future of manufacturing in Europe.
Take the process of applying for authorisation to use substances (either alone, in formulations or in products themselves) that are to be subject to widespread bans. This process is really in its infancy. So far 14 substances will be banned in 2014 and 2015 and a dozen or so of them have recently been recommended for future bans. The “authorisation” process is there because for some uses these substances may sometimes be the best for the job. There may be no suitable alternatives yet known. They may be used in a very controlled way and the public will have limited exposure to them. It may just be used in the process and may not even be detectable in the final product. Some may be safety critical.
However, the process of seeking an authorisation is nothing short of astonishing. On top of a weighty €50,000 application fee, companies are expected to demonstrate publicly that they have considered other alternatives and that the substance is being adequately controlled. Alternatively, they have to demonstrate that the socio-economic benefits outweigh the risks posed by that substance.
The costs to carry out this work cannot be underestimated. It risks running into hundreds of thousands of pounds. My question is how can SMEs expect to shoulder these costs in these financially constrained times? The complexity of managing the authorisation process is astonishing. The guidance runs to hundreds of pages. The data required to support applications is onerous. The technical skills required are beyond most. And how can SMEs expect to manage this process when they are fighting for new business and competing to survive? Furthermore, what manufacturer can be expected to show competitors the detailed outcome of their R&D in order to demonstrate consideration of alternatives? R&D is the lifeblood of manufacturing. It is how companies distinguish themselves in the marketplace. No one is going to happy about sharing such detail with competitors.
Even if you are lucky enough to be granted authorisation, where you sit in the supply chain really matters. For chemical manufacturers perched at the top of the supply chain, if they receive authorisation to use a substance in a particular way, very helpfully this permission flows all the way down the supply chain. So, in an ideal world, chemical manufacturers would apply for all authorisations and their customers could continue their business with no interruptions or worry. But the world is far from ideal. In some cases we have heard that chemical manufacturers have no intention of applying for authorisation for some uses, particularly niche ones. Maybe as a customer, you just don’t want to tell the chemical manufacturer how you use that substance. Maybe you don’t know who the chemical manufacturer is because you buy your chemicals from traders. Unfortunately, here the Regulation says that if you apply for authorisation, it only flows one tier up the supply chain to your “immediate” supplier. Meaning, pretty much everyone in your supply chain is going to have to apply for authorisation too. And if that’s the case, you are going to be locked into that supply chain leaving you extremely exposed to the business continuity risks of those specific suppliers who have gained authorisation. Not an ideal scenario.
In short, REACH is so fundamentally removed from the needs, motivations and processes of businesses, that it poses significant threats to our industry. We are working hard, both in the UK and Europe, to try to get some of these issues addressed. We have set up an e-alert service to help ensure you can stay on top of developments. It’s free and open to all. But it is up to every manufacturer to stay on top of developments to minimise risks. Speak to your supply chain. Assess where your REACH risks may lie. Ensure someone is monitoring REACH within your company. Be prepared.
Susanne Baker is Senior Climate and Environment Adviser at EEF. You can sign up to receive more information on REACH at: www.eef.org.uk/reach/alert-service/substance-alert-service.htm
In the news
Our comments on the latest trade data were reported by the FT and Independent whilst the Observer City Diary column referred back to the success of our recent manufacturing conference and dinner. Our views on sustainability and climate change were also reported in a piece in The Guardian.
Week in review
Consumer price inflation
CPI inflation rose to 3.5% in March, from 3.4% in February. This was the first monthly rise in CPI inflation since it peaked at 5.2% in September 2011. This rise in inflation had been expected, as prices normally increase in March, reflecting the end of post-Christmas discounting.
Labour market statistics
The number of people in employment increased by 53,000 in the three months to February, as an increase in the number of part-time employees outweighed a fall in full-time employment. The ILO measure of unemployment fell by 35,000, the first quarterly fall in unemployment since May 2011. The ILO unemployment rate fell from 8.4% to 8.3%. The Claimant Count measure of unemployment – which records the number of people claiming Job Seekers’ Allowance – has continued to rise, though the claimant count rate was 4.9%, unchanged from the previous month.
EEF Pay Settlements
The three-month average pay settlement was 2.6% in the three months to March, up slightly from 2.5% the month before, but remaining in line with the stable settlements levels seen since the beginning of 2011.
The MPC voted to maintain the Bank Rate at 0.5% and continue with asset purchases totalling £325bn. The committee noted recent weaknesses in official data but felt that underlying economic activity had probably picked up since the second half of 2011. CPI had started to fall back, but at a slightly slower rate than had previously been expected, meaning the path for inflation was likely to be higher than that forecast in the most recent inflation report.
The week ahead
Wed 25th: GDP
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