While restricted access to finance is a fading
concern for UK manufacturers, reluctance by businesses to invest in
new equipment, plus a lack of appropriate financial support from
the government, is a growing worry for producers of goods.
This was the mood among
delegates of EEF’s national manufacturing conference, held last
month at London’s Queen Elizabeth II conference centre and
featuring speakers including Ed Miliband and Vince Cable.
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Alexander Baldock,
managing director of asset finance giant and headline sponsor
Lombard, took to the stage at the event to make the case for asset
finance and engage other speakers in debate over the part it has to
play in the future of UK manufacturing.
“There is a need for
accelerated capital investment in the UK” said Baldock during a
panel discussion, adding that if UK businesses continued to stretch
asset lifecycles they put the country “at risk of a serious and
permanent lack of competitiveness.”
Talking about the need
for lenders to make good on promises to make funding available to
businesses, he continued: “We are for real, but the government has
a role to play too. Changes to capital allowances do not seem to be
high on the priority list, and the current system is far too
complicated.”
Dyson director Sir
Richard Needham, despite agreeing that major changes were needed to
the capital allowances regime, challenged Baldock’s view,
responding: “even if Lombard gets the kit through the door of the
company, will it do the job on its own? Of course not – it’s just
kit. It’s part of a wider issue that we need to get back to, of
bringing skilled people into the business that know what to do with
it.”
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By GlobalDataJan Ward, CEO of
resistant materials producer Corrotherm, took a middle-ground
stance, stating that both access to finance and access to skills
were perennial issues for manufacturing.
She added that current
government investment incentive programmes were of limited use to
the manufacturing sector. With 99% of businesses having less than
250 employees, she argued, few were of sufficient scale to make
investments above the £2m threshold of the current guarantee
scheme.
According to research
published last month by Lombard, UK businesses are turning down
some £2.3bn worth of contracts per year due to a reluctance to
invest, with 40% turning down new orders as a result of this
caution.
The research also claimed
that just 14% of businesses which did invest had done so through
asset finance, with 72% of respondents claiming they did not know
how asset finance worked.
See
also – Comment: Jane Gray – Editor, The
Manufacturer
