Written by Erica Bassford, Head of Aspire, LI Europe Ltd

Despite the doom and gloom so often reported in the media, UK manufacturing is not getting worse. The problem is that when the media talks about the manufacturing sector, it focuses on jobs, whereas when it reports on the financial sector, the focus is money.

Despite widespread perceptions, UK manufacturing is thriving. The UK is currently the eighth largest manufacturing nation in the world. Manufacturing makes up 11% of GVA and 44% of total exports for the UK. It also directly employs 2.7 million people.

It is true that output and productivity have flattened since 2007. There is a productivity conundrum, not just in the manufacturing sector but across the whole economy.

This lack of movement has been widely attributed to a decline in skilled workers and a decrease in employer-investment into training and development. However, while skills are an important part of enabling productivity, it is unlikely that this is the primary cause for any stagnation.

None-the-less, measures have been taken to address the skills shortage in the hope that this will drive up productivity.

One major initiative is the apprenticeship schemes which were put in place to combat poor productivity and the decline in employers’ investment in training. Unfortunately, the frameworks that were in place didn’t always result in the apprentices gaining the skills they needed to actually do the roles.  

In 2017, the Department of Education implemented several changes. The purpose of these changes was to ensure apprenticeships better served the needs of employers as well as improving the quality of training for the apprentices themselves.

Reforms were also introduced to make the programmes more employer-funded. Under the scheme, businesses that have a pay bill of over £3 million pay into a levy. The amount of funding you receive towards the training of an apprentice depends on whether you pay into the levy or not.

This is supposed to encourage businesses to run apprenticeship schemes so they can, in effect, reclaim their money from the pot. It acts as motivation for companies to upskill new and existing employees as they are already paying into the levy.

It all sounds great in theory. Unfortunately, the take up by employers has not been as high as expected. Since the funding reforms were introduced, there has actually been a decline in the number of people starting apprenticeships.

Anyone who has read about the Israeli Nursery Study in Freakonomics probably isn’t surprised by that.

So, what is the problem?

One reason is the risk of no return. While funding is available for training and assessment, there is still a big investment of time required to train apprentices. Employers must allow for 20% of the apprentices working time to be allocated to off the job training.

Apprenticeships are well tailored to large manufacturers who have high demand, but smaller manufacturers miss out because they do not have the scale to set the agenda. 

The FMCG Sector has many smaller manufacturers, but relatively few different technologies.  This makes it ideally suited to benefit from apprenticeships, but it requires collaboration between smaller manufacturers to set the curriculum, where historically there has been none.

FMCG manufacturers together are bigger than aerospace and automotive combined, and yet, current apprenticeship schemes do not adequately meet their needs. The FMCG academy exists to promote the needs of those thousands of small FMCG manufacturers.

Written by Adrian Oliver, Practitioner at LI Europe

 

Regarding productivity levels, the UK currently lags behind other European nations by a significant amount. According to Trading Economics website, the UK has a GDP per Capita of US$ 42,514 and sits 15th in Europe behind countries such as Germany (US$ 46,747), Netherlands (US$ 53,597), Denmark (US$ 61,582) and Norway (US$ 91,218)1.

Considering the challenges we already face, the last thing the UK manufacturing industry needs is more uncertainty in the coming years. This view is common throughout the food and drinks industry, and I hope it is also a view held by politicians trying to negotiate the Brexit deal with the EU.

Watching the news recently, I see that we are discussing extending the transition period from two to three years. No, wait; hang on a minute, Downing Street is now rowing back from that position to say it might be a “few additional months”.  Does anybody truly know how long the process will take?

Since the referendum in 2016, the fear of the unknown has had a major impact on the amount of investment that businesses have been willing to make. Figures from the Office for National Statistics show that investment levels are significantly lower than Bank of England expectations for the two-year period (a 2% increase versus an expected 13% rise). Indeed, investment has fallen over the last 12 months.

If our investment decisions are being delayed, how do we expect to compete with the rest of Europe and wider afield?

Fortunately, there is another way. A lot of the business owners we speak to have well-run, successful businesses. However, the thing that makes the top performers stand out is the balanced approach they have between productivity being driven through investment in equipment and investment in people.

Ask yourself this question; when you sit down at your next business planning meeting to agree on how to deliver a 10% increase in output without increasing wages, does your list contain mostly capital expenditure? If it does, are you missing an opportunity?

The Ambassadors Academy meets monthly for ambitious manufacturing professionals concerned with driving productivity, in all its form.  If this article interested you and you’d like to find out more about the Academy follow this link to the Ambassadors webpage.

Notes:
1. Data is based on 2017 figures and can be found at www.tradingeconomics.com

Written by Jeremy Praud, Head of UK & Europe at LI Europe.

I’ve been putting it off, but the other day I finally decided to properly read “Management 2020” cover to cover instead of just flicking through the key paragraphs. It makes some great points – and there is good insight to be found in those 57 pages – but I was struggling to get past page 15, something didn’t feel right. The caption says “The UK… suffers from a significant productivity gap compared with the US, Japan and Germany”. Nothing to argue with there – we all know that right? And Figure 1 helpfully shows the UK highlighted in red, a third of the way down in 6th place. At the top, the US, France and Germany. Hang on – France? Really? Where’s Japan – erm, I just found it way down in 12th place.

The graph must be wrong – I’ll check the OECD website. The report was published in 2014 (although you can still download it today), and I can only find the most recent data – but it paints the same picture. So we’re more productive than Japan! Who would have thought it? Certainly not the author, or proof readers, or anyone else in the past 4 years who skimmed past it. Why is that? This is a government report after all – I’ve got to believe some pretty skilled people reviewed this report – why is it that that no one picked up on this error?

That got me thinking. When something is part of the established narrative, we tend not to question it. We just nod, and carry on.  “Behind the US, Japan, and Germany” – that’s the narrative, and since it is how we define ourselves, there is little incentive to really change. “Better than Japan, but a long way behind France” – that’s a very different truth. One much harder for a Brit to take, and surely a much better incentive to show we really can improve productivity if we don’t shackle our minds?

Link to Management 2020 report

The Ambassadors Academy meets monthly for ambitious manufacturing professionals concerned with driving productivity, in all its form.  If this article interested you and you’d like to find out more about the Academy follow this link to the Ambassadors webpage.

Written by Adrian Oliver, Practitioner at LI Europe

 

“Sorry I’ll be late home again tonight, everything will be back to normal after the board meeting…I promise”

 

I put down the phone and rub my sore eyes. That was my wife Jane asking if I was going to be home in time to see the kids before they go to bed. I’m not in her good books – that’s the third night in a row I am working late to get things sorted for the half-year review.

Somehow I’ve got to come up with a plan that will deliver a £1 million savings from our production costs. My management team has been working on it for the last six months but we just can’t get seem to make the improvements we need…

All right, that sounds a bit cliched and corny, the sentiment, described however, is often relayed to us by new clients, “The management team is putting all the hours and pulling every rabbit out of the hat, but seem unable to make the necessary breakthrough in performance.”

Typically, six months after starting the improvement programme there is a blinding realisation from the management team that the answers were available to them all the time. They just hadn’t known where to find them.

Many businesses will tell you that their greatest asset is their people. But how many managers truly live and breathe that idea? How many managers take the time to stop and listen to what their people are telling them, let alone allowing them to get involved and take ownership for driving improvement and delivering results?

“True competitive advantage occurs when a business is able to improve more quickly than the competition.”

True competitive advantage occurs when a business is able to improve more quickly than the competition. To allow for this to happen, we need people who know what is important, understand how the business is performing and are able to share their ideas with the management team in a clear and concise way that helps the manager make the best decision.

If people are truly the greatest asset then surely the best leaders will prioritise their day to spend quality time with their people. This starts with being present at their place of work. Taking the time to walk the area and discuss performance with individuals. Listening to issues and concerns then coaching and supporting to implement effective solutions.

In a presentation given by a senior manager from Toyota recently he quite rightly observed that the best employees always had problems. What he meant by that was that if someone had a problem it indicated that they were thinking about the business and an opportunity to improve existed. It is the leader’s responsibility to remove any blockers from stopping the improvement from happening.

As your people become used to you listening to them and showing an interest in making their jobs more interesting and effective, they will start to look forward to your regular walkabouts. By establishing a fixed route and time they will know when and where they can speak with you.

Combine this with a group of people with a common understanding and language for solving problems then the level of trust and mutual understanding between employee and leader increases massively. It is truly amazing to watch, during the course of an improvement workshop, the confidence and engagement level build in previously disenfranchised people. I have witnessed people in tears of joy as they overcome years of frustration of managers having not listening to them.

If you find yourself empathising with the red-eyed manager missing his kids bed time, or recognise that being present with your people gets squeezed in at the end of the day only if you have cleared your inbox then visit www.laurasinternational.com and explore whether or not there is a fit for you.

 

Written by Erica Bassford, Head of Aspire, LI Europe

I recently asked a group of Front Line Managers ‘Who holds power in your workplace?’. Not surprisingly they focussed on the Legitimate Power, given by virtue of the organisational structure. At the top of their list was their MD followed by their Directors and then their Managers. If their position alone did not get action then using Reward (if I do this well, I might get a pay rise) or Coercion (I had better do it, else my boss might discipline me) usually did the trick.

 

Web_Erica_ResourcesWhen the group considered ‘What is power?’ they soon realised that the ability to get people to do something they wouldn’t otherwise have done doesn’t rest solely with management. Other people within their organisation, without grand job titles, also had power. They had key influencers throughout their business.

 

When asked what these individuals had that gave them power they identified two key elements; they had either gained respect for who they were (Referent Power) or had gained respect for their knowledge and experience (Expert Power).

The skill of a Great Leader is not to accumulate power but to manage others with power. Which people in your organisation have the greatest power to get others to act? Are they leading others astray?

Identify who has the power in your business then share with them your vision, not forgetting to include where they fit within that vision. Give these individuals open and honest constructive feedback, both of the things they do well and of their short comings.

Don’t forget Great Leaders don’t have all the answers so solicit feedback, listen and be prepared to make adjustments too.

If you’re looking to harness the power of your workforce, and develop Great Leaders in your business, get in touch today to see how our ‘Aspire – Producing Excellence‘ programs could help.

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