In recent weeks the state of the manufacturing sector in Northern Ireland has come under the spotlight with job losses being announced, the operational and financial difficulties of one of the largest private sector employers creating column inches globally and the muted response by the Northern Ireland Executive and the arm’s length body tasked with job creation, Invest NI.
This firstly is not a Northern Ireland only question it is one that is faced in most of the economies in the western world, and no one single issue is the cause or the solution. But is this a crisis or a crossroads where we need to change direction and approach? Certainly this week within his regular article in the Belfast Telegraph, NI economist John Simpson made that the focus of his thoughts on Invest NI, and that could easily have been projected into the manufacturing sector.
While this has the feel of crisis and for those currently impacted by the decisions to close JTI and Michelin in Ballymena that would be hard to counter, there is a need to look deeper than the complaints of high electricity bills and cheaper labour in Eastern Europe and Asia.
1. Employee Engagement and Social Partnership
Developing meaningful relationships with team members and the Trade Unions is critical, something employers (in both the private and public sector) and within government need to start taking seriously. It also is essential that the Trade Unions join business in looking beyond the next pay settlement and work together to understand how the local business fits into the global picture (either as part of multi-national or as an individual entity in a global economy). Factories are becoming more portable, technology is making it easier to move operations east to west and north to south, yet we seem to be entirely blinkered to this globalisation and then need for strategic long term thinking.
2. Infrastructure
We continue to under invest in the key infrastructure needed to improve our economic performance, road, rail and air networks remain hopelessly inadequate. The A5 debacle highlights this, coupled with the latest issues for the inter-city rail connection between Dublin and Belfast. In GB or mainland Europe commuting is the norm, here our infrastructure manages to make a commute from Lisburn or Bangor to Belfast difficult! The investment in the utilities infrastructure needs understood, not paying for water is fine until the infrastructure used to deliver it is costing more than what we have subsidised it by.
3. Productivity
Too often this is see as asking for more for less, this is not the case. In a recent visit to the BAE SYSTEMS facilities in Scotstoun and Govan in Glasgow they showed how with meaningful engagement with the Trade Unions, a clear vision and set of objectives they have achieved 17% productivity gains without pay reduction, improved working conditions coupled with reduced maintenance and quality costs. Productivity needs investment, investment in technology and investment in skills, this is not cheap but the benefit is staying ahead of the pack with a quality product that is in the market earlier, while it may be copied it can be developed and keep ahead of the curve.
4. Skills
Much has been made of the budget pressures facing our HE sector, stating this is a sign of an economy going backwards. Let us not forget they are private business, receiving extraordinary levels of support from the state. How they are paid for needs seriously re-examined. This requires difficult political decisions to be taken, in last weeks’ Time Magazine the cost of student debt to the economy in the United States is $1.3 trillion USD! President Obama has decided the best way is to write large chunks of this off, storing up another economic crisis for a couple of Presidents down the line. But skills needed for the economy only partly come from a degree, in fact it can be legitimately argued we should be reducing graduate opportunities to around 30%, developing, as Minister Farry and DEL have, our apprenticeship and youth training strategies and the opportunities coming from them. We need to invest in entrepreneurial skills, leadership and management, creating progression opportunities for all in our society.
5. Technology
The digitisation of our economy and in particular within manufacturing is essential. The new Space facility at SERC gives a glimpse into this with advanced manufacturing, diagnostic technology and virtual reality all co-located for the student learning experience. This needs embraced by both our large employers and vitally our SME community. We need to find a mechanism that makes it an incentive for local business to invest in the latest technology, grow R&D activity and in turn attract foreign investments to nurture and grow this further.
Genuine engagement by government in Northern Ireland is now needed, looking beyond those shouting for here and now measures, some of which are valid but much of which does not look beyond what is essentially a survival mode. As we come to the end of this current Assembly and move forward with a new Department for the Economy we have an opportunity to create not just a 1-2 year survival project but a 15-20 year vision for manufacturing in the Northern Ireland economy. This will add value for all, will stimulate growth, investment in education and health, reinvigorate communities, tap into the talents of a workforce driven by success and finally make cutting corporation tax of actual value to our economy and the manufacturing sector in particular.
This firstly is not a Northern Ireland only question it is one that is faced in most of the economies in the western world, and no one single issue is the cause or the solution. But is this a crisis or a crossroads where we need to change direction and approach? Certainly this week within his regular article in the Belfast Telegraph, NI economist John Simpson made that the focus of his thoughts on Invest NI, and that could easily have been projected into the manufacturing sector.
While this has the feel of crisis and for those currently impacted by the decisions to close JTI and Michelin in Ballymena that would be hard to counter, there is a need to look deeper than the complaints of high electricity bills and cheaper labour in Eastern Europe and Asia.
1. Employee Engagement and Social Partnership
Developing meaningful relationships with team members and the Trade Unions is critical, something employers (in both the private and public sector) and within government need to start taking seriously. It also is essential that the Trade Unions join business in looking beyond the next pay settlement and work together to understand how the local business fits into the global picture (either as part of multi-national or as an individual entity in a global economy). Factories are becoming more portable, technology is making it easier to move operations east to west and north to south, yet we seem to be entirely blinkered to this globalisation and then need for strategic long term thinking.
2. Infrastructure
We continue to under invest in the key infrastructure needed to improve our economic performance, road, rail and air networks remain hopelessly inadequate. The A5 debacle highlights this, coupled with the latest issues for the inter-city rail connection between Dublin and Belfast. In GB or mainland Europe commuting is the norm, here our infrastructure manages to make a commute from Lisburn or Bangor to Belfast difficult! The investment in the utilities infrastructure needs understood, not paying for water is fine until the infrastructure used to deliver it is costing more than what we have subsidised it by.
3. Productivity
Too often this is see as asking for more for less, this is not the case. In a recent visit to the BAE SYSTEMS facilities in Scotstoun and Govan in Glasgow they showed how with meaningful engagement with the Trade Unions, a clear vision and set of objectives they have achieved 17% productivity gains without pay reduction, improved working conditions coupled with reduced maintenance and quality costs. Productivity needs investment, investment in technology and investment in skills, this is not cheap but the benefit is staying ahead of the pack with a quality product that is in the market earlier, while it may be copied it can be developed and keep ahead of the curve.
4. Skills
Much has been made of the budget pressures facing our HE sector, stating this is a sign of an economy going backwards. Let us not forget they are private business, receiving extraordinary levels of support from the state. How they are paid for needs seriously re-examined. This requires difficult political decisions to be taken, in last weeks’ Time Magazine the cost of student debt to the economy in the United States is $1.3 trillion USD! President Obama has decided the best way is to write large chunks of this off, storing up another economic crisis for a couple of Presidents down the line. But skills needed for the economy only partly come from a degree, in fact it can be legitimately argued we should be reducing graduate opportunities to around 30%, developing, as Minister Farry and DEL have, our apprenticeship and youth training strategies and the opportunities coming from them. We need to invest in entrepreneurial skills, leadership and management, creating progression opportunities for all in our society.
5. Technology
The digitisation of our economy and in particular within manufacturing is essential. The new Space facility at SERC gives a glimpse into this with advanced manufacturing, diagnostic technology and virtual reality all co-located for the student learning experience. This needs embraced by both our large employers and vitally our SME community. We need to find a mechanism that makes it an incentive for local business to invest in the latest technology, grow R&D activity and in turn attract foreign investments to nurture and grow this further.
Genuine engagement by government in Northern Ireland is now needed, looking beyond those shouting for here and now measures, some of which are valid but much of which does not look beyond what is essentially a survival mode. As we come to the end of this current Assembly and move forward with a new Department for the Economy we have an opportunity to create not just a 1-2 year survival project but a 15-20 year vision for manufacturing in the Northern Ireland economy. This will add value for all, will stimulate growth, investment in education and health, reinvigorate communities, tap into the talents of a workforce driven by success and finally make cutting corporation tax of actual value to our economy and the manufacturing sector in particular.
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