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EAMA - Engineering & Machinery Alliance Press release

Thursday 9 March 2006

 

UK manufacturing needs to build productive capability
EAMA’s Budget submission also proposes way forward on family friendly agenda

 

The Engineering and Machinery Alliance (EAMA), a grouping of 1000 SME manufacturers, has recommended action in four areas for the Budget on March 22 to help reverse the declining trend in UK manufacturing investment.

  • Introducing 100% capital allowances for investment in productive capacity, along the lines currently available for environmental improvement.
  • A 2% reduction in Insurance Premium Tax for manufacturers employing up to 250 people. Practical changes to the way Corporation Tax is structured so that it no longer discourages but rather encourages UK companies to do business in export markets.
  • Introducing a training incentive (such as a credit against National Insurance) to facilitate upskilling for operators of new machinery.

Since the 1997 election, UK annual manufacturing investment has fallen 42% as a whole or an average of 37% per company. As a result, EAMA believes, UK manufacturing’s competitiveness is increasingly vulnerable in higher value added.

For example, according to the United Nations 2004 World Robotics Report, UK manufacturing is running 40 robots per 100,000 employed in manufacturing. This does not compare well with the UK’s EU competitors, France (78), Italy (123) and Germany (162) or with the USA (69).

Graham Hayes, EAMA’s chairman points out that the government has a difficult balancing act with its twin drives to simplify regulations on the one hand and extend family friendly policies on the other.

“ Earlier last year one of EAMA’s grass roots surveys clearly showed that SME manufacturers were most concerned about how to cover skilled employees’ longer term absences, under the proposals in the bill extending leave entitlement.

“At a meeting earlier this year with the Treasury we proposed a way to get over this problem. We suggested that with business they look at a retiree tax incentive to form a pool of skilled, trained personnel able and interested in taking on work as extended temporary cover. This might be for parental leave, but it could also be useful for other reasons such as enabling someone to follow fulltime, intensive training.

“The scheme of course has to be made attractive to retirees. For example, the two sources of income, from temporary work and pensions, might be taxed separately. The Treasury team said that they would take the idea away and consider it.”

According to EAMA, UK mechanical engineering is an unsung success story in that it continues to run a positive trade balance of around £4 billion on exports of £25 billion. In essence the sector’s success in exporting is built on foreign firms’ commitment to investment as a route to greater efficiency as export sales account for three-quarters of UK mechanical engineering turnover.

(ends)

Notes to Editors:

  1. ONS Annual Business Inquiry December 2005

    Year
    Firms
    Number
    Turnover
    £million
    GVA
    £million
    Employment
    Thousand
    Capital Expenditure
    £million
    1995
    171,518
    425,963
    139,927
    18,136
    1996
    164,808
    450,177
    144,001
    18,565
    1997
    169,663
    469,787
    148,927
    20,314
    1998
    169,376
    460,677
    149,892
    4,416
    20,386
    1999
    170,196
    461,771
    150,449
    4,269
    18,125
    2000
    167,289
    469,146
    148,793
    4,143
    17,004
    2001
    164,718
    461,898
    145,230
    3,969
    16,278
    2002
    162,212
    450,090
    144,149
    3,762
    13,237
    2003
    157,892
    446,369
    142,337
    3,533
    12,831
    2004
    154,926
    465,698
    149,822
    3,409
    11,745

  2. EAMA’s seven member associations are: British Automation and Robot Association (BARA), British Paper Machinery Suppliers Association (BPMSA), British Turned Part Manufacturers Association (BTMA), Gauge and Toolmakers Association (GTMA), Manufacturing Technologies Association (MTA), Printing, Papermaking and Converting Suppliers Association (PICON), Processing and Packaging Machinery Association (PPMA)