UK Economy
The UK manufacturer taking on China
7 May 2012
Last updated at 19:00 ET
For years, companies have been shifting manufacturing to China attracted by the cheap labour, but wages and costs are escalating, and for one businessman at least, investing in British manufacturing has become an increasingly attractive option.
On a recent trip to his cushion factory in China, Liverpool businessman Tony Caldeira was confronted by Xiao Qi, one of the local workforce.
She was not happy that she had only been offered a 30% wage increase and told him it was not enough.
“If we’re going to be as busy as last year, then I think I cannot accept this. If you want to find another worker, that’s fine,” said Xiao Qi calmly.
Rising aspirations and soaring costs in shops are motivating Chinese workers like Xiao Qi to demand higher pay.
“She’s actually wanting a 50% pay rise in essence,” said Mr Caldeira, “and basically sticking a gun to my head and saying: ‘Well if you don’t pay me 50% more, then I’m off somewhere else.’
“In the UK warehouse, if somebody came to me and said I want a 25% pay rise, they’d be on the next bus back to Kirkby, it just wouldn’t happen.
Continue reading the main story
Find out more
- Watch The Town Taking on China on Tuesday 8 May and Tuesday 15 May at 20:00 BST on BBC Two or catch up on iPlayer (UK only) via the link
“Because there’s another 100 people waiting to take their place. It’s not like that here.”
Family firm
Mr Caldeira began work on the family market stall selling cushions in the mid-1980s aged 15 and helped grow a successful company with two factories – one in Kirkby on Merseyside and one in nearby St Helens.
But about 10 years ago, he closed the factory in St Helens with the loss of about 100 jobs.
“It was a question of survival,” he said.
“We actually had the cheapest cushions in Europe, and then literally within a matter of three or four years the Chinese competition could sell products more cheaply then we could even make them.
“If we hadn’t reacted, we wouldn’t be here now because the company would have gone bust.”
He moved half the business to Zhejiang province in China, attracted by the low costs of the local labour market in China’s textile capital – the Hangzhou Bay region.
Continue reading the main story
“Start Quote
I still need a business in China, but not the kind of business that I envisaged say five to 10 years ago when I thought it was all going to go over to there”
End Quote
Tony Caldeira
MD, Caldeira UK
Workers would travel thousands of miles to seek job opportunities, often sleeping at the workplace in basic accommodation and only visiting loved ones back home once a year.
This skilled but cheap manufacturing workforce and close proximity to shipping routes in an internationally recognised textiles region made manufacturing in China extremely competitive.
The business grew and was moved into a large purpose-built new factory.
At the peak Mr Caldeira was employing 200 people. But in the last eight years, basic pay has risen from 20 pence per hour to £1 ($1.60). The workforce has been reduced to 50.
At a recent employment fair in Hangzhou, Caldeira was one of dozens of textile factory owners all offering similar jobs, with potential workers haggling over the basic wage on offer, secure in the knowledge that their skills were now highly valued.
“In the UK there are more workers than jobs. In China there are more jobs than workers,” said Mr Caldeira.
“You’ve got literally millions of people who have the opportunity of choosing which place to go to, which factory to actually work in.”
Made in the UK
Set against a backdrop of Chinese inflation and the rising costs of shipping goods globally, he believes the investment landscape has changed radically.
At a recent recruitment fair, manufacturers found themselves competing for recruits
Another factor is the quality of the workforce.
Whereas the cushion factory in China produces cheaper cushions, the Kirkby factory offers high-end, hand-finished products, often ending up on the shelves of well-known department stores.
“Productivity in the UK factory is much higher than it is in the Chinese factory,” said Mr Caldeira.
“My UK staff tend to have a longer attention span and they are able to focus for a longer period of time, whereas in China they tend to work for longer hours but don’t tend to do as many products per hour.”
At a recent textile trade fair in Frankfurt, Germany, it was the higher-quality products that were selling best.
The biggest order, worth several hundreds of thousands of pounds, came from a large chain of US stores which wanted a product made in the UK.
“The UK product in the States adds value just because it’s made in the UK. The customer sees value in that,” said Jessica Lewis buyer for TJX, the parent group of TK Maxx stores.
“We do buy a lot from China, it sells quite well, but the stuff we get from the UK is specific and it’s more fashion driven.”
Minimum wage
Costs have converged as well.
A year ago, one particular cushion cost 55 pence less to manufacture in China than in the UK. This year the difference is down to just eight pence.
But recruiting for factory work in the UK is a challenge.
Pay is at or close to the minimum wage and it is hard to recruit and hang on to a skilled labour force.
China’s economy continues to grow rapidly
Tony Caldeira recently hired 17 new members of staff in a variety of jobs in his Kirkby factory, but five quickly left.
“It is frustrating when people are very positive and tell you ‘I want to learn how to do this, I want to do a full-time job’ and then after two or three weeks just leave and go somewhere else,” he said.
“In many ways, a lot of our workforce is getting older and a lot of the skill bases are getting older as well.
“We’re getting to the point where we need to get some younger people in to the industry, in order that we have a long-term sustainable future.”
But whereas Mr Caldeira used to believe all his manufacturing would end up in China, now he sees things differently.
“I still need a business in China, but not the kind of business that I envisaged say five to 10 years ago when I thought it was all going to go over to there.
“People would say China was the cheapest place in the world to manufacture. It isn’t any more. So the fact of the matter is fairly simple, China isn’t going to dominate the world’s manufacturing forever.”
Article source: http://www.bbc.co.uk/news/business-17952023#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
The rise of underemployment
16 May 2012
Last updated at 08:46 ET
Working at Morrisons is one of several jobs Bill Cawley does
Unemployment may have fallen last month, but this figure is masked by the growing number of people who are being forced to work part-time because they cannot get a full-time job.
“Underemployment” has reached another record high, with a further 73,000 people joining the ranks of the underemployed over the last quarter.
It now means more than 1.4 million people are not getting the hours they want or need.
It is a phenomenon on a scale that we’ve never seen before.
And it appears to be affecting people right across the jobs market. And not just women.
Strain
There are now 645,000 men in forced part-time employment. Or to put it another way, more than a third of men in part-time work say they cannot find a full-time job.
While some work is clearly better than no work at all, this downsizing of hours and income is putting workers and their families under considerable strain.
Continue reading the main story
“Start Quote
I’m trying to do the best I can in difficult circumstances”
End Quote
Bill Cawley
Bill Cawley, 57, last had a full-time job in 2005 and has been forced to work part-time ever since.
He says not a day goes by when he doesn’t think about where his next payment is coming from.
Mr Cawley is more resourceful than most.
He does 20 hours a week as a check-out operator in supermarket Morrisons – a job he enjoys – and he writes freelance articles for local newspapers. He also dons a top hat to lead an evening ghost tour of Leek to top up his income.
But he says the going is tough.
“It’s a struggle to meet basics like fuel bills. I have an eight-year-old daughter and ensuring that she’s properly clothed and fed is always a difficult thing to do. Money is tight,” he says.
Mr Cawley is one of an army of male part-timers who feel over overlooked.
Dougie Walker says many of his friends have also struggled to find full-time work
“It’s frustrating. I’m trying to do the best I can in difficult circumstances. In our part of North Staffordshire there are very few jobs available,” he says.
‘Dead space’
Economists are attempting to understand the reasons for underemployment – exactly who is being hit and why.
According to research from the TUC, involuntary part-time work has risen more quickly than unemployment since the start of the recession.
During this period, the number of men in this position has risen by more than 115%.
And nearly a third of young people in work are having to do part-time hours, even though they want a full-time job.
Dougie Walker, 26, knows all about that. He currently does an average of 13 hours per week working in the box office of the Komedia club in Brighton.
He’s happy with his job but there is little prospect of any more hours.
“I think my generation is in this strange dead space in terms of careers,” he says.
Mr Walker works 13 hours a week at the Komedia club in Brighton but it is not enough to pay his rent
“Almost everyone I went to university with had to do internships and work for free, some up to a year. And I’ve got other friends doing part-time jobs.”
He is coping but things have not gone as planned since he graduated in 2008.
“I don’t have enough work to fully pay my rent and support myself. It’s a combination of benefits and friends until I hit a good patch where I can pay a few things off,” he admits.
Both Mr Walker and Mr Cawley – at different ends of their working lives – remain optimistic and each still nurture their own ambitions.
It just may take a lot longer than they expected.
Article source: http://www.bbc.co.uk/news/business-18091667#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
Why female unemployment has risen
16 May 2012
Last updated at 07:59 ET
Patricia Campbell says employers see hitting 50 as a negative
Unemployment has fallen and that is certainly good news for those who have been hunting for jobs.
But the jobless total is still high and it is hard to tell where it will be in the second half of this year.
Beneath the headlines are many puzzling aspects of the jobs market, one of which is that female unemployment has been rising a lot faster than the male total.
So why does it seem that the hunt for jobs is harder for women than men?
Patricia Campbell, from Edinburgh, is a former teacher.
Aged 51, she left her teaching job four years ago to look for other job opportunities.
Ms Campbell has been volunteering with various advice charities but has failed so far to land a paid job.
She recently turned to an Edinburgh-based charity – Women Onto Work – for help and support in finding work.
She has been claiming Jobseeker’s Allowance for 12 months and believes some employers still have ageist attitudes that can work more against women than men.
“Sometimes when women hit 50, they can become invisible,” she observes.
“Employers see hitting 50 as being a negative, instead of a plus. Instead of saying this person – this woman – has got a lot of experience, life experience and work experience, to bring to an employer… it’s a negative, a minus.”
‘Great in theory’
Jessica Beale, who is in her 30s, has a son at primary school and is his sole carer.
She needs to find work which will allow her to fit in her childcare commitments.
Jessica Beale fears her need for flexible working hours is affecting her chances of getting a job
But Ms Beale says that is a real struggle in the current economic climate.
“Although I think flexible working is great in theory, there are very few jobs out there anyway,” she says.
“So, I don’t think that somebody is going to give me a job if I need flexible hours whereas somebody else can come in and do the hours they want.”
The latest official figures reinforce the idea that life is tough for female jobseekers.
There are 1.5 million men out of work, and 1.1 million women, according to the latest figures from the Office for National Statistics.
But looking at the relative changes reveals widely differing experiences.
Male unemployment in the three months to March 2012 was down 42,000 on the previous quarter, but the equivalent fall for women was just 3,000.
Over the year to the first quarter of 2012, the male jobless total was up 78,000, that’s a 5.4% increase.
But the figure for women was up 92,000, an increase of 9%.
Higher education gamble?
Rose McConnachie saw higher education as an investment but says it now seems like a gamble
Rose McConnachie, 27, has a degree and postgraduate qualifications from Edinburgh University.
She cannot find any work relevant to her training in psychology and criminology, so has widened her search for any paid work.
But she has drawn a blank.
Ms McConnachie is increasingly frustrated that her higher education has not helped with the search for a job.
“I thought I was investing but it seems like I’ve taken a gamble,” she says.
“I mean, I’m great! I’m very clever, I’m very talented, I’ve got a lot of transferable skills and I’m very employable, but there just doesn’t seem to be anywhere for me to be utilised for anyone’s benefit.”
Ideas and ability
So are there any brighter signs on the horizon for female jobseekers?
Anna Louise Simpson believes there are.
Entrepreneur Anna Louise Simpson believes more women should set up their own businesses
She set up Mama Tea when she was at home looking after her young children.
Ms Simpson sells caffeine-free herbal teas, targeting expectant and new mothers looking for healthy options.
Sales have grown strongly. She has taken on one employee and will soon take on three more.
Ms Simpson believes female employees have a lot to offer and she is happy to employ staff on flexible hours, fitting in with childcare commitments. What’s more, she is urging more women to set up their own businesses.
“I think we need to give more help and support to female entrepreneurs because these women have got the ideas and they’ve got the ability but at the moment, a lot of them don’t have the confidence,” she says.
“So, we need to support them both in starting up businesses and growing them… and they will create the jobs.”
Creating the jobs is what will bring down unemployment, for both men and women.
The message from Edinburgh is that with a bit more imagination, employers can think harder about the benefits offered by female staff.
Article source: http://www.bbc.co.uk/news/business-18074790#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
Manufacturers ‘need more support’
15 May 2012
Last updated at 19:00 ET
Manufacturers want more government action to match the rhetoric
UK manufacturers want the government to offer more practical support to the industry rather than “empty rhetoric”, according to a new survey.
The creation of an “industrial bank” and a new focus on manufacturing skills are among ideas supported in the research by business advisers BDO.
There’s also a call for UK companies to be favoured when public contracts are awarded.
The government has said it wants to diversify the UK economy.
The BDO survey asked the opinions of 1,500 manufacturers and engineers.
Of those, 93% said they were pleased that ministers were renewing their commitment to the sector.
‘Words are not enough’
However, only 26% said they thought the government was adopting the right policies to support a growth in the manufacturing sector.
And around half didn’t think manufacturing would be a core part of the UK economy in a decade’s time.
“If there’s one overriding message we’re hearing from manufacturers, it’s that words are not enough,” said Tom Lawton, head of manufacturing for BDO.
“Our research suggests that policy pledges amount to empty rhetoric, not concrete change.”
Mr Lawton points out that countries like Germany, Japan and China have managed to build sustainable manufacturing sectors by establishing the sector as a priority.
“Optimism for longer term economic growth is encouraging, but it’s worrying that manufacturers don’t envisage they’ll have a significant role in achieving it,” he said.
The coalition government wants to boost manufacturing as a way of offsetting austerity measures and re-balancing the economy.
They also see it as a way of reducing the UK’s reliance on the South and the financial services sector for jobs and tax revenues.
Article source: http://www.bbc.co.uk/news/business-18081782#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
UK unemployment falls by 45,000
16 May 2012
Last updated at 06:08 ET
Many economists had forecast that the jobless rate would remain unchanged
UK unemployment fell by 45,000 between January and March to 2.63 million, according to official figures.
The jobless rate fell to 8.2%, the Office for National Statistics said.
The number of people claiming Jobseeker’s Allowance fell by 13,700 to 1.59 million in April, despite recent data showing that the UK slipped back into recession at the start of 2012.
Employment Minister Chris Grayling said the figures were a “welcome step in the right direction”.
Continue reading the main story
Youth unemployment has also fallen, down by 17,000 over the latest quarter to 1.02 million.
But the ONS showed that the number of people unemployed for more than a year increased by 27,000 to 887,000, the worst total since 1996.
The number of people unemployed for more than two years rose by 5,000 to 428,000.
Shadow work and pensions secretary Liam Byrne said: “It is really worrying to see the soaring long term costs as the number of long term unemployed surges towards the 1 million mark – the highest since the Tories were in Government last time.”
“That’s why it was so complacent for the Government to give us a budget that failed to deliver on jobs. People in Britain are fighting through and this Government is failing to lift a finger to help,” he added.
‘International uncertainty’
Mr Grayling said: “For a number of months now, employment has been growing and this is starting to feed through into improving unemployment figures.
“However, we still face significant international uncertainty so we need to hold firm on our current economic strategy and continue to do everything we can to ensure unemployment continues to fall.”
Bank of England governor Sir Mervyn King said the latest figures were consistent with a gradual recovery in the UK economy.
James Knightley, analyst at ING, said the figures reinforced recent surveys from the private sector that hiring was picking up.
“The (ONS) UK labour data is remarkably strong. This doesn’t really tally with the fact that the UK is supposed to be in recession,” he said.
‘Salary sacrifices’
TUC general secretary Brendan Barber said: “Today’s figures are mixed, with the welcome fall in unemployment driven entirely by part-time jobs.
“However the collapse in wages is terrible news for those in work and threatens our chances of an economic recovery.
“The falling number of full-time jobs and the 6% fall in real wages over the last two years means that people are having to make huge salary sacrifices and put their careers on hold just to stay in work,” he said.
Have you recently found work? Have you been unemployed for a long period of time? Please tell us your experiences using the form below.
Article source: http://www.bbc.co.uk/news/business-18084679#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
UK trade deficit narrows in March
15 May 2012
Last updated at 05:21 ET
Exports to non-EU countries were stronger in March
The UK’s trade deficit narrowed in March, driven in particular by stronger exports to the US, China and Russia, official figures have shown.
The seasonally adjusted trade deficit in goods and services was £2.7bn, against £2.9bn the month before, the Office for National Statistics said.
Car exports in March were worth £200m more than the previous month.
The deficit on seasonally adjusted trade in goods was £8.6bn in March, unchanged on February.
The ONS said that the surplus on trade in services was estimated at £5.8bn in March compared with a £5.6bn surplus the month before.
Vicky Redwood, economist at Capital Economics, said that the figures revealed the impact of slowing trade with the eurozone.
“The breakdown of the figures suggests that the eurozone crisis is taking its toll,” she said. “The rise in exports was driven by a 12% jump in exports to outside the EU; export values to the EU were flat.
“The deepening of the eurozone crisis in recent days suggests that the near-term export outlook remains pretty poor, especially given the further rise in the pound.”
The deficit in trade in goods with EU countries widened by £700m to £4.5bn in March, compared with the deficit of £3.7bn in February. Exports were virtually unchanged at £13.2bn, and imports rose by £800m, or 4.4%, to £17.6bn.
Article source: http://www.bbc.co.uk/news/business-18069660#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
Manufacturing output up in March
10 May 2012
Last updated at 05:20 ET
Manufacturing bounced back in March from a steep drop in February
UK manufacturing output bounced back in March, figures show, but overall industrial output fell.
Manufacturing output rose by a stronger-than-expected 0.9%, after a fall of 1.1% in February.
Sectors including chemicals, transport equipment, computer and electronics were behind the recovery according to the Office for National Statistics.
The wider measure of industrial production fell 0.3%, due to a drop in oil and gas production.
“It’s encouraging to see that manufacturing almost recovered its February loses in March, although taken over Q1 [the first quarter] as a whole, the sector remains flat,” said Philip Shaw from Investec.
“The outlook for manufacturing has been clouded by differing messages from varying surveys. So for example the CBI quarterly survey was punchy but the most recent PMI [purchasing managers' index] figures suggest the sector is doing barely anything,” he said.
Andrew Johnson, senior economist at the EEF manufacturers’ organisation, said the data “suggests manufacturing is in a better position at the start of this year than it was at the end of 2011″.
“However, the challenges clearly remain formidable, especially with regard to major European markets,” he added.
Article source: http://www.bbc.co.uk/news/business-18018037#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
UK companies ‘remain optimistic’
7 May 2012
Last updated at 19:00 ET
Small manufacturers are feeling less gloomy about the UK economy
UK companies remain confident despite the UK economy entering a double-dip recession, two new surveys suggest.
Optimism among smaller manufacturers rose for the first time since the mid-2011, the business group CBI said.
And another survey – the UK Business Confidence Monitor – found confidence improved in the last three months, suggesting the UK will return to growth in the April-June quarter.
The UK shrank in the last two quarters, meaning it is back in recession.
But a net 22% of small and medium-sized enterprises (SMEs) who are manufacturers said they were more optimistic in the three months to April, the CBI said.
“Firms expect orders and output to rise strongly in the coming quarter and plan to invest more in the year ahead, pointing to growing momentum in manufacturing activity,” said Lucy Armstrong, chair of the CBI’s SME council.
The majority of respondents saw a slight rise in total new orders and expect to see faster growth over the next three months, the survey added.
Meanwhile, the latest UK Business Confidence Monitor from chartered accountants ICAEW and consultants Grant Thornton said that they saw increased confidence.
The BCM confidence index is 12, up from -9.3 in the last quarter and the highest level since the second quarter of 2011.
The increase implies economic growth of 0.6% in the second quarter, the organisations said.
“Turnover and profits are all increasing but nowhere near the rate seen pre-recession and businesses are beginning to realise that this environment may be the norm for some time,” said Grant Thornton chief executive Scott Barnes.
Article source: http://www.bbc.co.uk/news/business-17984885#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
Growth in manufacturing ‘slows’
1 May 2012
Last updated at 05:34 ET
The manufacturing PMI has shown growth for five consecutive months
Growth in the UK manufacturing sector slowed in April, according to an influential survey.
The Markit/CIPS purchasing managers’ index (PMI) dropped to 50.5 in April, down from 51.9 in March.
Any figure about 50 indicates an expansion of the sector. April’s figure was the fifth consecutive month of growth.
The slowdown was partly blamed on the steepest fall in new orders since May 2009.
“The good news is that manufacturing clocked up a fifth straight rise, whilst cost pressures have eased a little and some firms are still recruiting,” said Lee Hopley, chief economist at EEF, the manufacturers’ organisation.
“The bad is that ever-present eurozone woes are still bearing down on the short term outlook, with some suggestion of renewed downward pressure on export orders over the past month.”
It is one of the first signs of the state of the economy in the second quarter of 2012, following the news that the economy has contracted 0.2% in the first three months of the year.
The manufacturing sector accounts for about 11% of the UK economy.
Howard Archer, chief UK economist at IHS Global Insight, said the survey was: “Disappointing and an early blow to hopes that the economy will return to growth in the second quarter, especially as the extra day’s public holiday resulting from the Queen’s Diamond Jubilee will hold back overall economic activity during the quarter.”
Article source: http://www.bbc.co.uk/news/business-17906649#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
Construction growth ‘slows down’
2 May 2012
Last updated at 05:41 ET
A slowdown in construction in the first quarter contributed to the economy’s return to recession
Growth in the UK construction sector slowed in April, according to a closely-watched survey.
The Markit/CIPS construction purchasing managers’ index came in at 55.8, down from March’s 21-month high of 56.7.
Any figure over 50 suggests growth in the sector.
There is particular interest in the sector after its slowdown in the first three months of the year was partly blamed for the economic growth figure that pushed the UK back into recession.
The Office for National Statistics figures said construction had contracted by 3% in the first quarter compared with the previous three months.
That contributed to the overall 0.2% contraction in the economy.
But questions have been asked about how the ONS figures could have found such a decline in the sector when surveys were showing growth.
“On the face of it, this [PMI data] is a pretty encouraging survey that points to clear, decent construction expansion in April,” said Howard Archer, chief UK economist at IHS Global Insight.
“However, all construction data and surveys have to be taken with a considerable dose of salt at the moment as there are major discrepancies between what the surveys are indicating and what the hard data are showing.”
Article source: http://www.bbc.co.uk/news/business-17922225#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
RSS