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West Midlands

IoD West Midlands Chartered Directors: Skilled Labour Shortages May Worsen

Sue Hurrell 19 May 2017
IoD West Midlands, Chartered Directors

Chartered Directors from across the West Midlands recently gathered to discuss foreign exchange and currency volatility post the EU referendum.

In a wide-ranging debate, attention also turned to concerns about skilled labour shortages and the UK’s relationship with Europe after Article 50 is triggered. The referendum result in June sent a shock-wave through the financial markets, and the effect on sterling was immediate.

Jon Whittle, a foreign exchange analyst from Barclays, described Brexit as “the event that put currency back on the boardroom agenda” as companies sought to mitigate their risks and exposure in a highly volatile situation. This remains the case as we move forward and he advised: “Market volatility of 2016 has continued into 2017. In terms of forecasts, Barclays expect a strong USD to be a feature in 2017, whilst the view is Sterling may appreciate against the Euro, given the key political events in Europe across 2017”.

Exporters

The devaluation of the pound has been suggested by some commentators as a potential bonanza for exporters, although many in the room were sceptical, suggesting that lower-priced exports hadn’t so far necessarily generated more sales. As Steve Bray from SP Services said: “Customers are not beating down our door because we are cheaper.” Meanwhile, he observed: “Everyone is putting up prices and blaming currency.” The view from round the table was that any benefits would take time to filter through and were likely to require the development of new networks and customer bases.Opportunities had opened up for some, however. Andrew Riley from Mechatherm International whose company has won the Queen’s Award to Export said: “Base metal prices have surged such that clients are thinking of investing again. There are now fewer suppliers around after a few very tough years so we have been looking to increase our margins and we’re predicting a bright future! That demand is coming from the USA, Middle East, Russia and India.”Relations with Europe

Several within the group advised that the Brexit vote had hit many of our European neighbours hard, and that there had been a palpable sense of disbelief and disappointment among their overseas clients. There was a belief that the Brexit decision could lead to others following suit, not least because of economic pressures and political changes in countries such as Greece, Italy and France.

The UK was being closely watched by many to see how we fare outside the European Union before others consider their own future, advised Dr Jason Wouhra of East End Foods and Chair of the IoD West Midlands.

But, as Tim Eastwood observed: “We have no choice but to make exports and trade work. Europe still wants our products and we want their business but markets will become tougher and we have to become more creative to keep customers.”

It was felt that the UK’s long-standing global presence was likely to be in our favour. However, quite what our relations with President Trump will mean in terms of our relationship with Europe isn’t clear although there were concerns raised that it could be damaging. And, as the Barclay’s team advised, every time the President tweets, it injects more volatility into the financial markets.

Skilled Labour Shortages The live and present danger for many, particularly in engineering, was the increasing difficulty to recruit and retain skilled staff – an issue which could get far worse if the Government put a stop to all immigration. As Andrew Riley made clear: “We cannot increase exports without engineers.” The problem lies in part with a younger generation who typically only stay at a company for a few years before being attracted by higher salaries and prospects elsewhere. The group identified the need for smarter thinking to solve the issue. One suggestion was for manufacturers in future to temporarily exchange graduate engineers between industries, as a way to give them the extra experience they want and hopefully keep them from moving on. There were also universal calls for companies to continue to be allowed to employ foreign skilled workers post-Brexit. Those companies who had chosen instead to open up production plants abroad cautioned about the need to ensure manufacturing standards were still maintained, through a requirement for high-quality specification. There was also an appeal to better educate the next generation and attract more of them into manufacturing and engineering, including investing in funding apprenticeships. Overall, it was agreed, that there is a need to remain positive post-Brexit. Innovation is likely to be key - as Tim Eastwood succinctly put it, we need to, “improvise, adapt and overcome.”

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West Midlands

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