While being Chief Economist has the upside of lots of eating out, I do generally have to sing for it. I did so last night, in the company of manufacturers of all sizes in Cambridge alongside some passionate manufacturing supporters from Barclays and RSM.
There was lots of lively discussion, plenty of challenges for me, some self-reflection for the sector and some commentary that must have had the ears of some government officials burning. Here’s my where? What? and how? of last night’s debate.
Where is Sterling going?
I knew this was going to come up, because it always does and it’s a question we’re wrestling with when looking at our forecasts. Before I tucked into my main course, manufacturers were looking for an answer, particularly against the dollar due to recent volatility – something that seems to be causing a bit of a headache for a number of companies at the moment.
I have the feeling – as I often do on this question – that my answer wasn’t necessarily satisfactory, with Sterling likely to be buffeted by central bank decisions, growth prospects in the rest of the world and market reactions to the progress of Brexit talks.
As we set out in our 2018q1 Manufacturing Outlook forecasts last month we’re looking at an average rate of $1.38. This is lower than the average of an especially large spectrum of forecasts gathered by FocusEconomics. Ultimately, companies are looking more for stability rather than a low rate, which again is something I’m unable to offer reassurances on.
What actually is the government’s industrial strategy?
Moving on to the world of policy, the questions weren’t getting any easier. Unsurprising manufacturers were keen to express their views about the government’s industrial strategy, if only they were clearer about what is was and the status of government actions.
Being somewhat closer to the policy dialogue I could offer clarity on the former, but less on the latter as my colleague Chris’s blog alluded to recently.
Encouragingly, companies were on board with the purpose of industrial strategy – to create the conditions for the investment and innovation that will drive their success and that in the wider economy and that the goal of the strategy should be on addressing our poor productivity performance.
How can we spur culture change within manufacturing to boost productivity?
Productivity is not just a problem that government should be looking to fix, manufacturers – from management to employees, need a sharper focus on what they can do better too. I tried to tease out some of the management shortcoming that are playing a part on flat lining productivity, but questions were only flowing in one direction!
That’s OK – I’ll get another shot on our upcoming webinar looking at this and other factors that might be contributing to variable productivity performance across different manufacturing sectors. You can find out more about joining in here…
It was great to see so many manufacturers and most of those that I managed to speak to were positive about their business prospects, but any optimism was overlaid by challenges on skills and recruitment and inevitable uncertainty around Brexit.
If these sound like the kind of questions you fancy arguing about, you can check out our upcoming events and keep informed on our blog AND our new Whatsapp broadcast group (details to follow).