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Brexit: manufacturing a solution

15th September 2017

Despite concerns of a Brexit-driven slowdown, UK manufacturing recorded its fastest growth in three years in April as a slowly recovering global economy and a weaker pound boosted order books. Positivity in the sector has been borne out by our own experience, having seen demand for bespoke buildings for UK industry showing no slow down – in fact it’s been an incredibly buoyant sector over the last 12 months.

Perhaps we should not be surprised: manufacturing plays a vital part in the UK economy – according to the manufacturers’ organisation EEF, manufacturing makes up 10% of GVA and 45% of UK exports, and directly employs 2.7 million people. Another often-overlooked fact is that it is also an incredibly diverse sector. A report by the CBI in June found particularly strong performances in food, drink and chemicals spearheading a pick-up in orders in 13 of the 17 industrial sub-sectors it tracks each month.

The big question, of course, is whether this growth can be maintained, particularly following the triggering of Article 50 earlier this year. Demand for industrial property over the last 12 to 18 months has been such that supply in the UK market is now at a critical level at a time when Brexit uncertainty is starting to impact the speculative market as UK and overseas institutions take a more cautious investment outlook.

Whilst a decline in the value of sterling is boosting exports, the manufacturing sector is conversely experiencing added cost pressures in paying higher prices for a wide range of imported materials. The sector is also facing a skills gap – according to a survey of British manufacturers by Hennik Research some 70% say they are struggling to recruit experienced and skilled workers and nearly 40% experience problems hiring managers. Much like the construction and development industry, manufacturing has come to rely on non-British EU workers to fill vital roles at all levels of operation. Uncertainty over the rights of EU citizens and freedom of movement, coupled with fractious negotiations on trade, will almost certainly be reflected in manufacturing businesses taking a more measured approach to investment in the future.

Whilst we join with many other voices in calling for more clarity from Government on Brexit to ease market fears, we also acknowledge that the construction and development industry must play a key role not only in providing the right facilities and infrastructure, but also in influencing decisions that can drive growth in UK manufacturing in the coming years.

We must educate Local Planning Authorities on the importance of manufacturing to employment and the economy and ensure they integrate demand within planning policy and Local Development Frameworks. With Government setting a target of building one million new homes by 2020, local authority planning policy is understandably adopting a presumption in favour of housing, with employment land allocations treated separately, if at all. However, a more joined-up approach to masterplanning urban extensions is required if we are to create truly sustainable communities, offering not just homes but leisure, education and employment opportunities.

Some local authorities are enlightened in their approach. Birmingham City Council, for instance, has recently launched Peddimore, a new prime industrial development opportunity in the heart of the West Midlands, which is expected to create up to 10,000 jobs and make a £350 million contribution to the local economy. The site is also next to the Langley Sustainable Urban Extension site earmarked for up to 6,000 new homes and overall has access to a skilled workforce drawn from 2.6 million people living within a 40-minute drive.

Allocation of employment sites close to urban areas is essential if UK manufacturing is to continue to attract the labour it vitally requires. Likewise, overseas investors may see no future in siting their facilities in areas where they cannot access the appropriate skillsets – post Brexit, deals may need to be tailored to strategic employment locations.

Lastly, we need to ensure surplus Local Authority land is made available to support economic development. The ‘One Public Estate’ programme will assist in identifying sites, but a different mindset may be required to ensure that these public assets are optimised for value and impact, serving to encourage growth and activity.

James Nicholls, Stephen George + Partners

Photographer: Matthew Nicolson Photography