Give the sector an incentive to change

first_imgRelated posts:No related photos. Give the sector an incentive to changeOn 4 Dec 2001 in Personnel Today Comments are closed. UK manufacturing needs more than words of encouragement toup its productivity. It needs an action plan from employers and Government tohelp it embrace new ways of working Gordon Brown claims he wants to do more to recognise “the vitalcontribution of modern manufacturing to exports, innovation and our greatregions”. The results of a productivity survey by the Engineering Employers’Federation suggest there are plenty of issues the Chancellor can get his teethinto – highlighting a widening productivity gap between manufacturing in the UKand the US. The tough climate manufacturers have faced in recent years has put greateremphasis on the need to boost productivity and competitiveness. Both employersand the Government need to do more and learn from our American cousins. One possible solution, as demonstrated by US firms, is lean manufacturing.US-owned firms in the UK are having greater success with lean manufacturingthan UK-owned firms because they are using it more intensely. But a largeproportion of British firms have not ventured into lean manufacturing at all. The EEF is seeking to work in partnership with the DTI to tackle the lack ofawareness of the lean manufacturing model, and improve lean skills levelsacross the sector workforce. Economic research of the US experience in the 1990s provides convincingevidence that new work practices have also been a contributing factor toproductivity growth in manufacturing. According to the EEF survey, UK manufacturers are embracing new practices.Many are using output monitoring, individual performance appraisals, employeeinvolvement schemes, suggestion schemes and total quality processes. However,incentive or profit-based pay is not being used as widely as in US companies. In the UK, resistance to change is by far the biggest barrier to their takeup. This reflects the attitude of both managers and employees and shows aconcerted effort is needed to make companies more receptive to change. Attracting the right people is also a problem for the sector. UKmanufacturers try to get around the issue by focusing on offering good basicsalaries. However, these companies could learn from the example of US-ownedfirms in the UK which are benefiting from offering employees additionalbenefits, such as work-life balance, bonuses, training and personaldevelopment. But beyond this, the market is not delivering enough people with the rightskills. The Government must concentrate on addressing the shortfall in modernapprenticeships and re-develop the Individual Learning Accounts for training inthe workplace. More generally, under-investment in manufacturing has been damaging. Recentdata from National Statistics shows things are getting worse, withmanufacturing investment falling at the sharpest rate on record in the thirdquarter. Lack of orders, uncertainty over future demand and the exchange ratehave all undermined current and future profitability. If increased manufacturing productivity is a serious economic goal for theGovernment, it must try to break the long-term trend of under-investment in thesector and offer more incentives to help firms invest. This must include anR&D tax credit for larger firms in order to stimulate innovation. Boosting manufacturing productivity requires a partnership betweengovernment and employers. If Gordon Brown is serious about doing more formanufacturing in this country then it is time he matched sound words with firmactions. By Dougie Peedle, deputy chief economist of the Engineering Employers’Federation Previous Article Next Articlelast_img

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