UK competitiveness and Obama's SOTU - manufacturing highlights

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Interesting to hear reports today that UK has come out top in KPMG's league of competitiveness ranking countries by their ease of doing business.

I've finally had a chance to read through Obama's State of the Union address last week, with a special lookout for bits that were relevant to manufacturing - with a view to seeing how we are doing competitiveness-wise. I thought it might be interesting to have a look at what the president said and how this compares with what's happening in the UK.

Obama called for a tax code that lowered rates for manufacturers that create jobs in America and tax credits for firms that hire and invest.

In the UK, the government has aggressively cut the headline rate of corporation tax and at 24% now (and heading down further) is already a full eleven percentage points below the equivalent rate in the U.S. However, the picture for manufacturing is considerably more murky because part of the UK's reforms were made by making capital allowances less generous. The government has recently reversed it's cut of the Annual Investment Allowance (from £100k to £25k) and put this back up to £250k - but only for two years. We will definitely need to keep watching that space.

The U.S. has added 500,000 manufacturing jobs over the past three years

Obama notes that after a long period of falling job numbers, the U.S. has recently added jobs. A very similar story holds in the UK. After not having seen an increase in employment in manufacturing since 1998, in the four quarters ended 2012q3, UK manufacturing added 76,000 jobs.

Obama hailed the creation of a manufacturing innovation institute in Youngstown, Ohio and called for three more to be created working with the DoE and DoD.

In the UK we have the recently launched Catapult Centres. These are physical centres designed to increase collaboration between the UK's research base and business. Though not all are focused on manufacturing, the High Value Manufacturing Centre is one of the seven Catapults (although it is itself spread across seven locations).

We think the UK is going in the right direction here, though we could do with some more funding - the Catapults have only about half the funding of their German equivalents, the Fraunhofer Institutes (the HVM centre gets £25 million per year). Obama's talking about funding of $1 billion for up to 15 centres.

Obama wants a focus on STEM in high schools on and reform to the immigration system to make it easier to attract engineers

The same focus on STEM in UK high schools couldn't really be said to be occuring with the government's downgrade of the engineering diploma. And as for the immigration system - 'easy to attract engineers' are words that do not belong in the same sentence and have become less so in the government.


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