Intelligence Briefing 14th January 2016 | EEF

Intelligence Briefing 14th January 2016

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In this issue: Weekly Focus – Risks to manufacturers more prominent in 2016 Executive Survey | Emergency meeting with Business Minister on steel sector | Apprenticeship Levy engagement continues | Briefing the Europe Minister | Talking energy and climate change with the Labour party | In Parliament | In the media | Week in Review | The week ahead | Blogs from this week

Weekly Focus – Risks to manufacturers more prominent in 2016 Executive Survey

On Monday EEF published its fifth annual Executive Survey looking at manufacturers’ outlook for 2016.

The strongest theme that emerges from this year’s survey is that risks have become more prominent for manufacturers. More than two-fifths of companies believe there are more risks than opportunities for their business in the next 12 months. Whilst opportunities abound, potential challenges, and uncertainty about whether these will materialise, are leading to a more muted picture. The weakness in the global economy that manufacturers experienced in 2015 is expected to persist in 2016. On balance, manufacturers’ outlook for global economic conditions in 2016 is, like at the start of 2015, on the modestly negative side.

Against this challenging backdrop, manufacturers still expect to see growth. However the weaker global economic outlook has led to a reduction in expectations for growth in 2016 compared with 2015. Fewer manufacturers now expect the domestic market to support sales growth and companies’ outlook for workforce expansion has moderated significantly. Against that backdrop, and whilst still seen as an attractive location to do business, companies say that the UK is not looking quite as good a place to manufacture as it was last year.

Amidst these concerns, our Executive Survey shows that manufacturers are taking a broad range of actions to create their own opportunities for growth. Companies in the sector have dealt with volatile economic conditions for several years now, and will take proactive action to grow their businesses in 2016, albeit coupled with some more tough decisions. Not all of manufacturers’ activities in the year ahead will be focused on finding growth opportunities, some firms will be taking action on reducing costs and improving organisational efficiency.

As another risk-filled year starts for the UK manufacturing sector, companies are preparing themselves with a broad-based effort to capture opportunities and mitigate exposure to these risks.

For more information contact Maddie Scott, Senior Policy Manager

Emergency meeting with Business Minister on steel sector

EEF and UK Steel met Anna Soubry MP, Minister of State for Small Business, Industry and Enterprise, to discuss the worsening conditions the steel industry is facing and progress by the Government in meeting our ‘five key asks’ for the sector. We discussed the need for EU-level action on anti-dumping measures and the need to push the EU Commission to change its position on an ongoing anti-dumping case. We will continue to engage with Ministers on support for the steel sector and will be separately meeting with more ministers to discuss these issues in the next couple of weeks.

For more information contact Gareth Stace, Director of UK Steel

Apprenticeship Levy engagement continues

EEF held a meeting with the Skills Minister, Nick Boles MP, to discuss the future apprenticeship levy which was announced by the Chancellor in the Autumn statement. With businesses making their first levy payments of 0.5% of their paybills in April 2017, EEF highlighted the need for Government to swiftly announce how much levy-paying employers will get back from their payments to spend on training. The new system of vouchers, (which employers will receive to spend with training providers), will also need to be quickly developed, with employers wanting time to spend their vouchers, and the ability to transfer their vouchers to other organisations. We also discussed the new Institute for Apprenticeships, which will operate from 2017, and will be a key body advising on funding levels and standards. EEF will be continually consulting its members and regularly meeting with government as the development of the levy gathers speed. EEF is also hosting a bespoke discussion at its forthcoming 2016 National Manufacturing Conference, which will be joined by leading officials from the Treasury and Department for Business, Innovation and Skills, to discuss the future of the levy.

For more information contact Tim Thomas, Head of Employment and Skills Policy

Briefing the Europe Minister

EEF briefed the Europe Minister, David Lidington MP, on EEF’s ongoing research into members’ views of the EU. EEF also briefly discussed the forthcoming EU referendum and reiterated its stance that remaining in the EU was in the best interests of its members. EEF will continue to work with other stakeholders on the EU referendum in the coming weeks.

For more information contact Hywel Jarman, Director of External Affairs

Talking energy and climate change with the Labour party

EEF met with Lisa Nandy MP, Shadow Energy and Climate Change Secretary. This was our first meeting with the Shadow Secretary of State, and we briefed her on a wide range of topics within her brief including the 5th Carbon Budget, security of energy supply (including nuclear, offshore wind, role of gas and capacity markets), Industrial Roadmaps, Carbon Capture and Storage (CCS), and the EU Emissions Trading Scheme (EU ETS). This was a constructive first meeting, we will be following up with further briefings for Ms Nandy and will be continuing to engage with the opposition on energy and climate change issues in the months ahead.

For more information contact Rocky Lorusso, Head of Government Affairs

In Parliament

This week EEF briefed MPs from all parties ahead of an opposition day debate on ‘trade, exports, innovation and productivity’. Our research was mentioned twice by Shadow Business, Innovation and Skills Minister Bill Esterson MP, who commented that EEF research showed that half of manufacturers pointed to a skilled workforce as the single most important factor in boosting growth and productivity, and that 80% of EEF members intend to invest in machinery with the aim of increasing productivity.

Furthermore, during the Second Reading in the Lords of the Trade Union Bill the Labour peer Lord Pendry mentioned that EEF has concerns about the Bill.

For more information contact Rocky Lorusso, Head of Government Affairs

In the media

This week’s coverage has been dominated by economic news, in particular our Annual Executive Survey published in conjunction with Aldermore Bank. This was covered in the FT (subscription required) and Daily Telegraph while Chief Executive, Terry Scuoler, had an opinion column in the Daily Mail and was interviewed on 5 Live’s Wake up to Money and the Today programme. Our response to the following day’s poor output figures was contained in the Daily Telegraph, Independent and Guardian.

Week in review

UK Trade

The trade in goods balance narrowed from £11.2bn in October 2015, to £10.6bn in November 2015. The narrowing of the trade in goods balance was mainly the result of a fall in the import of goods of £0.9bn to £33.9 bn.

Index of production

Manufacturing output fell 0.4% in November 2015 following on from a fall of 0.4% in October. The largest fall over the month came from pharmaceuticals where output dropped 4.9%.

The week ahead

19th Jan: Consumer prices
20th Jan: Labour market statistics

Blogs from this week

11 Jan 2016
The headlines from the 2016 Executive Survey looking at manufacturers' expectations for the year ahead. by Felicity Burch

11 Jan 2016
Week ahead 11 January by Zach Witton

12 Jan 2016
The highlights and lowlights from today's official production data by Lee Hopley

14 Jan 2016
How is the outlook for 2016 affecting manufacturers’ expectations for their own firms' performance this year. by Felicity Burch

13 Jan 2016
We discuss the key risks for manufacturers in 2016 by Madeleine Scott

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