UK manufacturing downturn continues at end of third quarter
September saw the downturn in UK manufacturing output extend to three months, as companies cutback production in response to declining new order intakes. There was less
positive news on the price front as well, with rates of inflation for input costs and output charges both accelerating.
The seasonally adjusted S&P Global / CIPS UK Manufacturing Purchasing Managers’ Index® (PMI®) posted 48.4 in September, up from 47.3 in August but below the flash estimate of 48.5.
Although the rate of contraction in output eased slightly since August, it nonetheless remained substantial overall. Contractions were registered across the consumer, intermediate and investment goods industries. The steepest decline was at intermediate goods producers, which was also the only sub-sector to see its rate of contraction accelerate.
Manufacturers linked lower production to a reduction in new work intakes. The level of new business declined for the fourth month running, albeit to a slightly weaker extent than in August. Companies faced tougher conditions in both domestic and export markets. There were also reports of expected orders being postponed, or cancelled, due to factors such as rising uncertainty, inflationary pressure and the cost-of-living crisis.
September saw new export business contract at the quickest pace since May 2020, with reports of lower demand from the US, the EU and China. Manufacturers faced weak global
market conditions, rising uncertainty, high transportation costs reducing competitiveness and longer lead times leading to cancelled orders.
Manufacturers maintained a positive outlook overall during September. Over 49% forecast that their output would be higher one year from now, as planned investments, new product launches and hopes for a calmer economic backdrop are expected to lead to an influx of new contracts. However, the degree of positive sentiment remained subdued overall, amid concerns about market uncertainty, high inflation, the cost of living crisis and the increasing risk of economic recession in both the domestic and global economies.
September saw a further increase in manufacturing employment, as companies reported success in filling existing vacancies. Others noted that capacity had been raised to continue progress towards reducing backlogs of work. Outstanding business fell for the fifth straight month.
Price indices tracking input costs and output charges both strengthened in September, halting the recent slower inflationary trend at manufacturers. Moreover, rates of increase in both measures remained elevated and well above their respective survey averages.
Higher input costs were generally attributed to raw material shortages, sustained global commodity price inflation, cost pressures at suppliers, rising energy and transportation
costs and exchange rate factors. A wide range of inputs were reported as being up in price, including chemicals, electronics, food stuffs, metals, packaging, plastics and timber. Output charge increases were mainly the result of the pass through of high costs to clients.
After easing through much of the past year, the rate of lengthening in average vendor lead times increased for the first time in five months in September. Longer delivery times reflected raw material shortages, transport delays, insufficient capacity at vendors, disruption at ports and Brexit-related paperwork issues. Purchasing activity was cut back sharply again. However, stocks of both purchases and finished goods rose, mainly due to the recent slump in output and new order volumes.
Commenting on the latest survey results, Rob Dobson, director at S&P Global Market Intelligence, said: “The downturn in UK manufacturing continued at the end of the third quarter, meaning the goods producing sector looks set to have acted as a drag on GDP. Manufacturers have once again cut back production as new order intakes declined for the fourth successive month. Factories are reporting tough market conditions both at home and
abroad. Disappointingly, exports continue to fall despite the more competitive exchange rate.
“There was also less positive news on the price front, with rates of inflation in input costs and selling prices both picking up in September, linked in part to import costs rising due to the weaker pound.
“With existing headwinds from the cost-of-living crisis likely to be exacerbated by the current volatility in financial markets, growing economic uncertainty and further increases in borrowing rates, the industrial sector is likely to remain in the doldrums during the coming quarter to add to deepening recession risks.”
Dr. John Glen, chief economist at the Chartered Institute of Procurement & Supply, said: “Manufacturing businesses continued to feel an autumnal chill in September as declining sales, higher costs and a depressed marketplace pulled the sector down into contraction for a third month in a row.
“Supply chain managers were buying less as customers either failed to place orders or cancelled work in hand. This slowdown was across the board as both domestic and export orders fell, impacted by concerns over transportation difficulties, disruptions in Felixstowe and longer lead times. A shortage of components particularly made the completion of finished goods more difficult.
“It is tough to predict with any certainty that there could be potential improvement in manufacturing production in the last quarter. It is unlikely that supply chain managers
will have hedged against the weaknesses in the pound for instance which will continue to impact on imports and what consumers will see on shelves as the shopping season begins in the coming months.”
Realise Training continues growth strategy with latest acquisition
Sheffield-headquartered Realise Training, the MBO supported by private equity investor Enact in October 2020, has acquired Training Plus Merseyside (TPM), an independent training provider which delivers apprenticeships and training to more than 100 employers in the Liverpool City Region.
The acquisition of TPM is the second acquisition Realise has completed in the last 4 weeks after also acquiring FW Solutions.
Realise became a standalone business two years ago when Enact provided funding to support a management buyout. It delivers apprenticeships at Level Two, Three and Five to hundreds of early years settings and more than 1,000 learners across the UK and was voted Apprenticeship Provider of the Year at the prestigious FE Week & AELP Apprenticeship Awards earlier this year.
Gregg Scott, Managing Director of Realise, said: “The early years sector has been identified as a key growth area and to complete two acquisitions in quick succession is extremely pleasing.
“For more than two decades, Brian and Paula have been instrumental in the growth and success in TPM and we are thrilled to be trusted with continuing their outstanding work and excited to work with their learners, staff and stakeholders.
“The investment from Enact has been key to us developing the business, acquisitions such as this will help us deliver on our pledge to become the largest early years training provider in the UK and we have ambitious plans to continue our growth as a business through both organic and inorganic growth.”
TPM directors Brian Quinn and Paula Hayes have stepped down from their roles but all other staff and trainers from the company will continue with Realise.
Departing TPM director Brian Quinn said: “We have been immensely proud to have delivered training to so many learners over the last 22 years and build a reputation as a well-established and successful learning organisation. The time has come for myself and Paula to embrace semi-retirement but we are delighted to leave TPM, our learners and staff in such excellent hands.
“The vision Realise has of supporting employers to meet their needs by offering tailored training solutions is in line with the way we have grown TPM and Realise is also renowned for creating an excellent working culture and treating its people well. It is fitting that the people of TPM can now continue their growth alongside a provider with a truly national presence and a high quality reputation.”
Paul Denvers, investment director at Enact, said: “Realise continues to deliver on its growth strategy and to complete two acquisitions in four weeks is testament to the hard work of the management team.
“It also demonstrates Realise’s commitment to an inorganic growth strategy in a market where it is recognised as a ‘good home’ for learning providers. Acquiring an established and successful business such as TPM, as was also the case with the acquisition of FW Solutions, supports Realise’s growth strategy in the key sector of early years education.
“We are thrilled to be supporting a business which is delivering on its expansion plans and while we are actively looking for further acquisition opportunities, the key focus for Realise will always be retaining a quality learner experience and supporting its people.”
West Burton picked as site for fusion energy plant, creating thousands of jobs
The West Burton power station site near Gainsborough has been selected as the home for the UK’s prototype fusion energy plant which aims to be built by 2040.
It’s called ‘STEP’ (Spherical Tokamak for Energy Production) and involves the same physical reactions that power the sun and stars in a process by which two light atomic nuclei combine while releasing large amounts of energy. This technology has significant potential to deliver safe, sustainable, low carbon energy for future generations.
The government-backed STEP programme will create thousands of highly skilled jobs during construction and operations, as well as attracting other high tech industries to the region, and furthering the development of science and technology capabilities nationally.
The ambitious programme will also commit immediately to the development of apprenticeship schemes in the region, building on the success of the UK Atomic Energy Authority’s (UKAEA) Oxfordshire Advanced Skills centre in Culham. Conversations with local providers and employers have already begun, with schemes to start as soon as possible.
The UK government is providing £220 million of funding for the first phase of STEP, which will see the UK Atomic Energy Authority produce a concept design by 2024.
Trust turns up the heat with record revenues and national recognition
A Leeds business is celebrating after picking up a major national award in recognition of its entrepreneurial spirit and surging growth.
Garforth-based electric radiator manufacturer, Trust Electric Heating, triumphed at the annual Entrepreneur’s Circle awards (where it was up against hundreds of other businesses) after a surge in marketing and sales activity saw it record record revenues of £1m+.
The family business, which is run by Fiona and Scott Conor, saw sales soar following a campaign that challenged the stereotype that electric heating is more expensive to run than gas.
With their traditional residential market and landlords firmly in their sights, Trust also turned their attention to prospects within the educational sector and even the Church of England’s wide portfolio of properties.
Managing Director Fiona Conor explains: “We may be a relatively small, family run business (compared to our global competitors) but we have big ambitions. We’re also on a mission to help households tackle this ever spiralling energy crisis and contrary to popular belief, electric heating is often a much more effective and affordable solution than gas.
“It all comes down to the efficiency of your system and that of course includes your radiators. Ours are all made here in Garforth using components that are made in the UK – barring our soapstone core – and are nothing like the old electric radiators you might think of!
“The technology has come on in leaps and bounds and they are now slimline, stylish and super-efficient. That offering, along with being a family business that actively promotes UK manufacturing, resonates with our customers and has seen us record revenues this year which are just shy of £1.5m.”
Fiona received her award on the night from comedian Jimmy Carr and also met with popular BBC “Dragon” Sara Davies, who shared her entrepreneurial journey with the 1000+ audience.
“I am so excited and proud to have won but I will confess I was a little nervous walking onto the stage to be greeted by Jimmy! He was lovely though and reminded us all that there’s room for personality and a sense of fun in business.
“Meeting Sara was incredible. She is such an inspiration, so down to earth and so positive. It has been an incredible year for us but we’re not done yet. We have major goals both in terms of our business growth and our wider mission promoting British manufacturing and helping to play our part in tackling the energy crisis. Watch this space!”
Government plans to crank up pollution fines to £250million
The Government wants to raise the civil penalty for water companies who pollute the environment from £250,000 to up to £250 million.
The move comes as part of a push for water companies to invest more in preventing pollution and securing water supplies for future generations. Last year there were 62 serious pollution incidents by water companies – up from 44 in 2020.
At present, if water companies fail to uphold the law or cause environmental harm, the Environment Agency can pursue both criminal and civil prosecutions as part of their enforcement regime.
Whilst fines handed out by the courts through criminal prosecutions are unlimited, these can be a lengthy and costly process. Civil sanctions called Variable Monetary Penalties imposed directly by the EA rather than the courts can offer a quicker method of enforcement.
VMPs can be issued for more serious offences, including when there is evidence of negligence or mismanagement or when there is an environmental impact.
It’s claimed increasing the cap for fines up to £250 million will simplify and speed up the process of enforcement by allowing the EA to directly hand out penalties to water companies.
Environment Secretary Ranil Jayawardena said: “I have been clear that if water companies don’t do what is expected, there will be consequences. Bigger financial penalties will act as a greater deterrent and push water companies to do more, and faster, when it comes to investing in infrastructure and improving the quality of our water.
“This 1,000-fold increase sends a clear signal that we want clean rivers and coastlines, and that the duty falls to the water companies to deliver – the polluter must pay.”
BAM accelerates UK and Ireland carbon reductions to Net Zero by 2026
BAM’s UK & Ireland businesses have set an ambitious carbon target to become net zero in their direct operations by 2026. It is ruling out counting electricity from green energy tariffs towards its net zero emissions.
The target places BAM at the forefront of the UK and Ireland’s construction sector’s major contractors.
It builds upon Royal BAM Group’s target to reduce its direct emissions intensity by 80% by 2026 from 2015 levels.
The company is committed to openness and not relying heavily on carbon offsets which it believes can disguise more substantial progress in how a company is acting.
BAM’s UK & Ireland net zero commitment encompasses not just direct scope 1 and scope 2 emissions (associated with fuels and energy use), but also select scope 3 emissions, going further than most net zero carbon targets in the sector.
BAM’s scope 3 emissions include water consumption, staff transport (across road, rail and air), emissions arising from using hotels, emissions from third party fuel and energy use and all well-to-tank (upstream) emissions associated with scope 1 and scope 2 emissions. The company says it has significant influence over all these emissions sources.
BAM becomes the only company in the sector at present not to count its purchase of renewable (REGO-backed) electricity towards zero emissions.
Any remaining emissions from 2026 will be offset using high quality nature-based solutions such as re-forestation, or carbon capture technologies.
John Wilkinson, Chief Operating Officer of BAM UK & Ireland, said: “Net zero carbon is the objective we are all seeking because the construction sector still accounts for 39% of all global emissions. We have a serious job on our hands to get that down and to do so fast.
“That’s why we have chosen to accelerate our progress – and we are not fooled that we will be alone. The whole industry needs to challenge itself, work together, and assist its clients and supply chain to make faster progress too.
“There is no room for or advantage in disguising or hiding performance. Vague data is useless, so science based, transparent information and a healthy dose of honesty are part of the medicine.
“The other red herring is offsetting. We cannot rely on planting trees elsewhere in the world to cover up our own emissions. Although these have a role to play in the short term, we must drive these down ourselves and face up to our responsibilities.
“I believe BAM is now firmly at the forefront of our industry but it is the sort of arms race we need to collectively bring about change and decarbonise our environment.”
There is also another crucial difference to most other net zero commitments concerning the scope 2 emissions arising from electricity use.
BAM has chosen to use location-based emissions (that’s the true emissions of the energy used at the plug) as part of its direct emissions inventory.
The vast majority of the company’s direct energy procurement already uses REGO-backed energy contracts (Renewable Energy Guarantee of origin certificates issues by Ofgem on behalf of the UK Government) and whilst it could use these to claim that it is zero carbon, BAM believes that it should seek to reduce the real emissions from grid electricity usage.
BAM is supporting the drive towards building more renewable energy generation through the delivery of schemes such as the SSE substations framework in Scotland which directly links to renewable generation.
BAM’s Carbon Reduction Lead, Sarah Jolliffe, added: “We are on a journey here – we have already reduced our emissions intensity by 20% this year compared to the same period last year, mitigating the release of 7 kilotons of carbon.
“We have worked with the Carbon Trust on measuring scope 3 emissions and our FM business has helped pioneer Scope 3 measurement in the facilities management sector working with the SFMI (The Sustainable FM Index). These kinds of collaborations are crucial as we explore more ways to work with our supply chain and clients to decarbonise the built environment.
“The data baseline this has created and our investment in data collection and analysis is a key enabler in confidently setting this new demanding 2026 target.”
Yorkshire law firm Gordons appointed by Ocado Retail
Retail specialist law firm Gordons has been hired by Ocado Retail, the joint venture between Ocado Group and Marks & Spencer, to advise on a range of legal requirements.
Gordons now acts for seven of the UK’s top 14 grocery businesses including B&M, Iceland and Morrisons.
Ocado Retail’s stated ambition is to be the biggest online grocer in the UK and Gordons has been appointed to help the business achieve that objective.
The law firm’s scope of work has increased over time and includes advising on supply chain relationships and commercial contracts.
Ocado Retail’s General Counsel and Chief People Officer, Jonathan Wiseman, said: “We regard Gordons as one of the leading retail and grocery law firms in the UK. They understand Ocado Retail, where we want to be and how to help us get there.
“Our relationship is evolving and growing as we work together, and we are very pleased to have the firm as an adviser as we continue on our growth journey.”
Ocado Retail is responsible for ocado.com and Ocado Zoom, the group’s fast-growing, same-day grocery service.
Gordons partner and head of food and drink, Mark Jones, said: “Ocado Retail is an exciting business with a clear growth strategy. We are looking forward to helping the business continue to outperform the market and offer an unrivalled online grocery buying experience.”
Employing 170 people, Gordons has offices in Leeds and Bradford. The firm’s other retail clients include AO, Moss Bros and Wren Kitchens.
BHP responds to Chancellor Kwasi Kwarteng’s tax cut U-turn announcement
Zoe Roberts, Tax Partner at leading Yorkshire accountancy firm BHP, has provided guidance and advice in response to today’s (3 October 2022) tax cut U-turn on the proposed abolition of the 45p rate.
Zoe said: “Following Liz Truss’s surprise statement yesterday that ‘it was his idea’, Kwasi Kwarteng announced this morning that the proposed abolition of the 45p rate would not proceed.
“He stated that ‘it is clear that the abolition of the 45p tax rate has become a distraction from our overriding mission to tackle the challenges facing our country’.
“As a result, I’m announcing that we’re not proceeding with the abolition of the 45p tax rate. We get it, and we have listened.”
“The rest of the statement focused on delivering the Growth Plan and driving supply-side reforms. Further announcements are expected over the coming weeks, followed by the fiscal statement with full costings currently planned for 23 November.
“Whether other u-turns will be coming remains to be seen. The reversal of the Health and Social Care Levy and the proposed corporation tax rate were part of Liz Truss’ election proposals, so it could be assumed these will remain.
“Still, with this Government’s non-traditional approach to fiscal announcements, it is difficult to predict anything with certainty.”
Zoe advises: “Anyone planning to delay bonuses beyond 5 April 2023 to take advantage of the abolition of the additional tax rates can revert to a delay after 6 November to benefit from the drop in NI.
“Dividend tax rates are currently expected to drop by 1.25 per cent after 5 April 2023, so you may wish to consider delaying these if you can, although, with high inflation and interest rates, the tax saving may not outweigh the cash flow delay.”
Opportunities for businesses and job seekers at employment & training event
A free event to highlight employment opportunities, career guidance and training in the district will take place next month.
The West Lindsey Employment & Skills Partnership is sponsoring an Autumn Jobs and Training Fair, which will be supported by the Department for Work & Pensions (DWP) on Tuesday 18th October 2022.
This interactive and informative event will take place at the Riverside Room in Gainsborough between 10am-2pm and offers all residents access to help and advice from employers, training providers and advice agencies.
Local employers and organisation’s promoting career opportunities and training in the district will be available to speak to, with experts on hand to talk about the skills employers are looking for.
Graham Metcalfe, Partnership Manager for the DWP said “we have worked closely with the Council & the Skills Partnership over many years to assist with the running of similar events which provide employers and partners with an opportunity to connect their offers to the customer base. These events provide great outcomes for those able to attend. We look forward to supporting Octobers event.’
West Lindsey District Council is a member of the Skills Partnership and will sponsor the event. Amanda Bouttell who is the employment and skills lead for the Council is currently lining up employers to attend with job vacancies.
She said: “During this period of economic uncertainty and with the pressure on individuals to seek or change employment, it’s really vital that we can offer an event that brings together organisations offering employment advice and support alongside employers with a wide ranges of job openings. Not only is it a brilliant opportunity for employers to showcase their organisations, the event intends to give individuals the confidence boost to apply for job roles.”
The event is suitable to anyone interested or considering the following:
- Job vacancies
- Apprenticeships
- Work placements
- Traineeships
- Career opportunities
- Higher level qualifications
- Guidance and advice on current training available
- Information on volunteering and work experience opportunities
Reward raises £15,000 for Aching Arms charity in Leeds to support bereaved parents
A year-long fundraising effort by staff at Reward Finance Group in Leeds has raised £15,000 for its local charity partner Aching Arms, which provides support to bereaved parents coping with the loss of a baby during pregnancy, at birth or immediately after.
The money raised by Reward will deliver much-needed funds to the charity which uniquely provides comfort bears to hospitals and hospices, for midwives and nurses to offer to bereaved parents in their care. Each year in the UK around 3,000 babies are stillborn and one in four pregnancies end in miscarriage.
Along with the comfort bears, it also provides a vital support service and community to parents after their loss and currently works with over 170 hospitals in the UK, as well as an increasing number of hospices, support groups and funeral directors. Since its launch as a small grassroots charity back in 2010 by Leanne Turner, Aching Arms has seen demand for its service double in the last 12 months.
Speaking about the donation, Mel Barclay, trustee for Aching Arms in Leeds, said: “Our 12 month partnership with Reward has been extremely successful. We are very grateful to all the team for the guidance, support and knowledge they have provided and the many physically challenging fundraising events they have hosted.
“The money raised will support the charity to continue its work in supporting newly bereaved families who experience the loss of their baby before, during or shortly after birth. On behalf of the whole team at Aching Arms, I would like to say a heartfelt thank you.”
From hosting its annual charity quiz at Leeds Arena to completing the Leeds 10k Clarion Corporate Challenge and coming first out of 40 companies, the team at Reward embarked on a range of fundraising initiatives to achieve its ambitious target.
Gemma Wright, Reward’s Managing Director for Yorkshire and the North East, added: “When we heard about Leanne’s heartbreaking personal story and the terrific work Aching Arms does to help parents coping with such tragic loss, we immediately wanted to offer our support.
“It really opened our eyes to the charity’s community and the essential services it provides to grieving parents, with the team here at Reward working tirelessly to reach a fundraising target that exceeded our expectations. We’d like to thank everyone involved who both raised money and donated and wish the charity all the best for the year ahead as demand for its services unfortunately continues to grow.”
