This article by Tanya Powley in the Financial Times is not about energy or energy efficiency, but it does reflect the reluctance of investment in general in Britain’s industry. Britain’s economy is doing much better than most of the European Union and yet, several years after the start of the current financial crisis, we are still facing this dirth in investment. Currently in Europe there is what is known as the Energy Efficiency Financial Institutions Group, organised by the European Commission and the United Nations Environment Programme, to see how to drive investments in energy efficiency. Its interim report last April was on buildings and now the group is analysing the industrial sector. The final report is due early in 2015. Hopefully it will find a way to address this sector that is, simply, struggling. Rod and EiD are representing Energy Efficiency in Industrial Processes at this group.
UK manufacturers remain wary of investment
Britain’s manufacturers remain reluctant to invest more, with up to half not planning to increase spending on machinery in the next two years, research has shown.
More than 90 per cent of businesses spent money on plant and machinery over the past two years, with investment levels averaging £1m, according to a survey of 173 groups by EEF, the manufacturers’ trade body, and Lombard Asset Finance.
However, half of the companies said they did not plan to scale up their current spending over the next two years. The remainder planned to increase their expenditure only at moderate levels, and mainly to replace obsolete technology.
The findings follow recent data dimming hopes that manufacturing and exports would lead the way in Britain’s economic recovery, despite surveys suggesting that confidence and activity were on the rise.
Activity in UK manufacturing slowed to a 14-month low in August, according to the CIPS/Markit manufacturing purchasing managers’ survey. A separate survey by the EEF and the accountancy firm BDO found that UK manufacturing export orders had turned negative for the first time since the start of 2013.
Lee Hopley, chief economist at EEF, said the industry was not making the “step change in investment plans” needed. “Plans continue to be held back by uncertainty, resources and factors that tilt the decision in favour of other locations,” she said.
Of those companies cautious about investing over the next two years, one in three cited uncertainty over demand, with a similar number pointing to constraints on internal finance.
However, the EEF/Lombard report showed that UK manufacturers planned to spend more money in other areas of their business.
About 70 per cent said they would increase their investment in staff training and recruitment to try to gain a competitive advantage, while three out of five said they would spend more on marketing and branding, and a similar amount on research and development.
Duo UK, a Manchester-based polythene manufacturer, invested £1.1m in machinery and software last year to help it enter new markets, but also spent almost £1m on investment in training and development.
Dale Brimelow, operations director at Duo, said: “With an economic upturn finally predicted, we knew we needed to increase capacity and improve efficiency in 2013.”
Richard Hemsley, managing director at Lombard, said: “Although it appears that manufacturers are taking a somewhat cautious approach, they are also feeling bolstered by a growing confidence in the economic climate.”
Energy in Demand - Sustainable Energy - Rod Janssen 