Huge productivity gains key to beating inflationary pressures, MTA tells manufacturers ahead of MACH 2022

With inflationary pressures mounting on manufacturers for the first time in decades, only a sustained effort to increase productivity will ensure their future competitiveness, the head of the trade association organising the MACH 2022 exhibition has said.

James Selka, CEO of The Manufacturing Technologies Association (MTA), said outside forces were converging on manufacturers and it was important they held their nerve in the face of cost challenges.

Manufacturing resolve is already being firmly tested by rising energy prices, a growth in factory gate inflation due to the increasing cost of raw materials, escalating labour costs and continued supply chain disruption. This was before the disruption caused by the invasion of Ukraine.

The combination of all these factors has resulted in margins being squeezed tightly in what is, an economy still recovering from the effects of the pandemic.

In the face of such challenges, manufacturers have been left with little option other than to increase their own prices. This can only be a short-term option however, as the inflationary impact of this could ultimately be very damaging.

Pressure from the business lobby urging the Chancellor to delay the planned increase in National Insurance in this month’s Spring Statement is growing. If it goes ahead, the changes will see a £250 annual tax increase for the average worker, together with additional costs for businesses looking to hire staff as they stage their recovery from the impact of Covid-19.

However, indications are that both the Prime Minister and the Chancellor remain committed to the increase and an extension of the fiscal stimulus package may not materialise.

“It is understandable the business lobby would call on the Chancellor to delay any NI increase, and this may still happen. However, it cannot be relied upon,” said Mr Selka.

“With inflation rising for the first time in decades, UK manufacturers need to make huge productivity improvements in order to avoid being squeezed by the challenges of increasing their prices to customers, rising supply costs amid continued supply chain disruption, huge energy cost increases and the rising cost of attracting and retaining talent.”

Mr Selka said the answer to this difficult situation was for manufacturers to take full advantage of the fiscal stimulus schemes that are available to businesses looking to accelerate investment in order to sustainably make a step change in their competitiveness.

“While the short-term scenario may be challenging for manufacturers, the MTA prefers to play the long game. We are still confident in the ability of the UK economy to recover long-term and analytic data both from the MTA’s own economic consultants and that of the CBI, suggests that plans by manufacturers to invest in new plant and machinery over the coming twelve months remain good,” he said.

“With the arrival of MACH 2022 in just a couple of weeks, the exhibition could not be better timed. In order to make the step change improvements in productivity and therefore competitiveness, manufacturers need only three things – technologies, the skill to acquire and deploy those technologies, and the finance to make it happen. Technologies have never been more powerful and affordable, the UK has an incredible reputation for its innovative and flexible workforce, and finance assisted by government incentives such as Super-Deduction and the Annual Investment Allowance is incredibly good value and hugely available.”

MACH 2022, which opens its doors at the NEC in Birmingham between 4-8^th April, is set to be the most significant gathering of manufacturers in the UK this year. Aside from highlighting some of the most important issues facing the manufacturing industry, the exhibition will also feature the largest display of new machinery and manufacturing technologies under one roof in the UK for four years.

“There has never been a better time to accelerate investment in UK manufacturing and with MACH 2022 bringing together the latest advanced engineering and manufacturing technologies in operation all under one roof, it will be perfect place for manufacturers to come and view the best new machines on the market,” said Mr Selka.