What will a material constrained future look like? And what does this mean for manufacturing? As we have previously reported accessing and securing raw materials has risen quickly up the manufacturing agenda. Earlier this year we surveyed executives to find out what they perceived as the biggest threats to growth. The Eurozone crisis? Access to finance?
Accessing the right skills? Perhaps surprisingly 80% of respondents said access to raw materials was a risk to growth. One in three said it was their top risk.
Material prices have since stabilised and in some cases dropped. But for how long? With rapid development in emerging economies, three billion people are expected to join the ranks of the world's middle class within the next 20 years. I'm not a gambling woman but I'm willing to bet that this is going to put significant upward pressure on material prices in future. The government's Resource Security Action Plan, published in March, attempts to address some of these concerns. But we don't think it goes far enough. We were not alone in this thinking.
Since March we have been speaking to NGOs, business groups and professional institutes - including the Aerospace, Defence and Security Association, Friends of the Earth, the Confederation of Paper Industries, the British Plastics Federation, the Packaging Federation, British Glass, the Institute of Environmental Management and Assessment, the Resource Association, UK Steel, the Metal Packaging Manufacturers Association, the North East Sustainable Resource Board and the University of Cambridge's Professor Steve Evans (Institute of Manufacturing) - to find out what they thought.
What we have found is widespread concern about the environmental degradation associated with our material consumption, concern about future access to the materials that a vibrant manufacturing base will require and a healthy willingness to examine where we can go from here. We all agree the Action Plan needs to be bolder, wider and more visionary.
Together we have written to government calling for greater leadership and a more ambitious, informed vision for a resource efficient economy. We believe this is not only vital from an environmental perspective, but also vital to ensure the integrity of future UK manufacturing. Without a wider Action Plan which has greater ambition we are concerned that it leaves our economy open to significant, future resource shocks.
Among our initial policy proposals we ask government to establish an Office for Resource Management to coordinate activity across Whitehall departments. To educate and engage the entire supply chain and those that influence it – including politicians, designers, producers, retailers and consumers. To extend the scope of the Plan to cover a wider range of materials. Commit to gathering and utilising better data on material and waste flows in our economy.
Realign material targets to focus on quality as well as quantity. Consider restricting key materials from energy-from-waste plants as well as landfill. Help deliver a level playing field for UK manufacturers and domestic reprocessors of waste by reviewing the PRN/PERN system. Finally we want government to explore resource efficiency incentives and review producer responsibility regimes.
This is really just the beginning of our thinking in this area. We are committed to working with government and others to test, examine and develop these ideas whilst considering whether more needs to be done. Expect more debate. More ideas. Not least around the concept of a circular economy. A McKinsey infographic neatly explains the concept if you aren't familiar with it. EEF research suggests that these business models can add healthy profits and shield companies from resource shocks. Watch this space for more on this soon.