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Productivity Challenge

Written by Adrian Oliver, Practitioner at Lauras International

 

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

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