News last week of another 95 jobs at Bombardier being at risk will be deeply unsettling for the workforce and their families. But sadly it is another sign of the distress Covid has brought to the local aerospace sector which has seen some 2,000 jobs leaking away in 2020.
Expect promises of retraining and reskilling as a response but these are some of our most skilled workers already. Preparing these workers for other industries is a real waste of talent and of opportunity.
The best place for them would be to move in to our SME manufacturers. Bringing their experience and expertise to this part of industry could catapult the fortunes of these businesses.
For that to happen, these firms need to survive. However, as yet, there is no signs that the Executive will come to their aid like they have done for sectors. These export focused, high value added advanced manufacturing firms are just the ones that every region across these islands are falling over themselves to attract and support yet here they have to fend for themselves.
Manufacturing is one of the toughest and most expensive businesses to start. It is not simply the case of getting premises and a team together, buying some stock, getting your marketing right and opening the doors with customer waiting outside.
It is all of that, but with a big capital outlay on machinery, whose value is written down over 20 or 30 years, building a team with technical expertise, establishing complex global supply chains, months and years of product development, getting product and market approvals and then a long wait for prospects to have the confidence to be turned in to customers.
In many cases, it is a very long runway which sometimes requires significant lengthening before the business takes off.
With manufacturing businesses so difficult to start up, it becomes even more important that the Executive and its agencies are there for those who have made it through the difficult early years.
The Finance Minister provided a four-month rates holiday, but business rates bills have started to land again including for those still closed. The Chancellor stepped in to support payroll, but costs for employers have begun to ramp up before the furlough scheme closes at the end of October (interesting news this week that Angela Merkel has extended their equivalent of flexi-furlough to 24 months . . . so go on Rishi, you know it makes sense).
However, it is now three months since the Economy Minister closed the business grant schemes which were hugely welcome by lots of businesses – whether they needed the grants for not. At least £53m remains unspent. Despite commitments that those who fell between the cracks would be supported if money were available, as yet no proposal have been put to the Executive to distribute this underspend to those firms in dire need.
We all eagerly await our economic rebuilding plan, but that will only work if we rescue our SMEs. We can’t afford to let them fail.
On the health front, the fight continues. For the economy, the diagnosis also makes for grim reading. With four out of five of NI manufacturing firms using cash from the business to sustain operations now, they really need to be supported in getting back safely to business.
As well as supporting hundreds of thousands of jobs across Northern Ireland, many of our manufacturers are facing a battle on several fronts. Many rely on a healthy export market to survive and all rely on continued investment in research and development to remain competitive.
With cashflow tougher and supply chain challenges, now more than ever and many manufacturers facing significant new investment in health and safety in order to maintain social distancing within their facilities to protect their workforce, it is an incredibly challenging time.
Prior to Covid-19, challenge around the impact of Brexit were already placing a strain on our manufacturers. Both Westminster and NI Executive recognised that our competitiveness in this post-EU environment would require support.
In Northern Ireland, they pledged a target of achieving a research and development (R&D) spend of £1.2billion by 2025. Is this still realistic?
Certainly, investment in R&D is seen as an important way of building for the future, with innovations in new equipment, products and processes along with investment in people and skills. But if can only be achieved if manufacturing companies get as much support as possible to help them survive this year.
R&D Tax Credits is a government initiative developed to encourage innovation and now more than ever provide a valuable source of financial benefit for manufacturers facing the worst.
A total of £75 million was paid out to businesses in Northern Ireland in R&D Tax Credits during 2017-18. But many businesses are still missing out on potentially tens of thousands of pounds.
Yesterday I spoke to Stephen Kelly, Chief Executive of Manufacturing NI who confirmed the pressure his members are under at this time: “Hundreds of our manufacturers are providing life-sustaining, priority goods for consumption at home and as part of international supply chains. A significant number of our members have repurposed during the Covid-19 pandemic; changes have been made to products and services as well as to processes as many have had to adapt to changing staffing levels. R&D is critical to all of this and we are keen to alert manufacturers to claim the benefits these tax credits provide.
“With 4 out of 5 of our currently firms using cash from the business to sustain operations now, R&D tax credits should be considered a very legitimate and accessible way to get additional cash into your business at this time.”
The rebuilding of our economy relies on our manufacturing companies who rely strongly on R&D. There is support available for companies of all shapes, sizes and sectors but many companies are not claiming their full legitimate entitlement and could be losing out on tens of thousands of pounds.
We are working closely with Manufacturing NI and a broad range of companies across Northern Ireland to help them get their slice of the millions that the government has made available.
At such a time it is also vital that when claims are submitted the government moves quickly with payments. In helping Northern Ireland companies claim for tens of thousands in recent weeks, it is reassuring to see that HMRC are clearly making this happen that for many within the manufacturing industry are proving vital as they fight for survival.
With even more R&D promised in the most recent UK Budget, we are calling for all companies large or small to seek advice in this area. We are all in this together and working together I hope we not only survive but thrive in the years ahead.
This article by Manufacturing NI Stephen Kelly originally appeared in the Irish News on August 25th. See it here