Though my readers are used to reading about my own experiences with Lean and Not So Lean manufacturing practices, this month I have included some excellent content from my long-time business associate, Roy McFarlane, who shares my enduring passion to help manufacturers improve their bottom line through sustainably reduced wastage and improved efficiency.
Recently, Roy wrote an article from which this is a brief but compelling extract: You can see the full article on Roy’s website or on LinkedIn. This does not assume that Roy McFarlane shares my views in the rest of this article.
11+ years of low productivity, why?
The UK has had consistently low productivity since the 2008 recession. Although it didn’t start there, productivity has been in decline since the early 1990’s. When compared to our European neighbours and other 1st tier nations, the UK has a consistent record for economic short-sightedness and persistent under investment across all key productivity drivers. This isn’t just in manufacturing, but across all sectors of the economy. The national productivity index hasn’t risen above 0.2% more than a few times since the late 1980’s. So, why has this trend continued for so many years?
The key elements of productivity improvement are:
1.Leadership, 2.Culture, 3.Skills, 4.Tools, 5.Systems, 6. sector Processes and 7.Products
Which of these is the most important in your sector?
Roy McFarlane CEng.
Total Productivity Solutions Ltd.
Equally importantly, which of the key elements above, by their absence, are most likely to be undermining your performance improvement objectives?
With Brexit and the unprecedented political shenanigans that are the current apology for a well-structured political base, it is easy to become side-lined with this alternately depressing and somewhat entertaining spectacle of 650 ‘desperate and disparate’ MPs failing to reach an agreement to carry out the ‘Will of the People’.
What seems to have been either missed or glossed over, however, by politicians of all persuasions is that the EU affords little or no commercial protection for its member states. ‘We are all in it together’ we are told, but we are not all in it together equally.
It is easy to believe that we are strictly operating within a ‘Common Market’, but we are not. Our politicians must already be aware of this, but seem to be keeping very quiet about it.
The minimum wage in the UK, the 5th highest in the EU, is now £8.21 per hour and set to increase year on year. The minimum wage in Bulgaria, the lowest in the EU, is £1.50 per hour. Six of the 28 countries that make up the EU, including Italy, don’t even have a minimum wage, so where is this ‘common market’? Where is the level playing field that creates equal opportunities for all its members?
China has a Higher Minimum Wage than Bulgaria.
Interestingly, the minimum wage in China is currently £2.77 per hour, nearly twice as much as Bulgaria. The real difference is that we can impose import tariffs on low wage economies such as China, but not Bulgaria, as they are part of our super protective Common Market, that is supposed to protect the European block against other low wage world economies. So where is the protection? Why aren’t our politicians talking about this instead of trying to give the impression that we will either be better off staying in the EU or by coming out of it? What difference will it really make to our future prosperity?
A Better Insight of What’s to Come?
For some UK companies, Brexit is being used as a massive excuse to reduce costs. Jaguar Landrover, for instance, made 4,500 people redundant in Solihull, having opened a brand new, state of the art factory in Slovakia. The excuse? You guessed it, Brexit! But what’s the real reason? As has already been said, our minimum hourly wage is currently £8.21, but the minimum hourly wage in Slovakia is £2.50. You do the math!
When we start to research the relative productivity of different countries as Roy McFarlane has obviously done, our vulnerability becomes even more concerning. From a productivity standpoint, we are currently 27th amongst the main industrial nations. The USA are at number 5 or 6. As Roy says, “Why?” Unfortunately, this lacklustre performance in our productivity stems from a consistent lack of investment over decades.
We can’t put the clock back, but we can recognise that we have to commit without further delay to greater efficiency and sustained continuous improvement. We are already known, (especially within the food and drink industry), throughout the world, for our consistently high-quality standards but, we must become more productive, without losing our high-quality reputation
That is going to take some investment, not only in automation and real-time systems development, but also in training, retraining, coaching and generally encouraging the workforce to find better ways of doing things rather than the classic ‘we have always done it this way’ We often start this process with a value stream map from goods inwards to despatch where, in simple terms, we look for opportunities to improve the Value Added, whilst looking for ways to reduce the necessary Non Value Added and, at the same time, eliminate the unnecessary Non Value Added completely. Every part of the manufacturing process must be continuously challenged to deliver more if we are to firstly improve our productivity and secondly to compete with the low wage economies, inside or outside the EU.
This approach might seem too simplistic, but we have seen stunning results where the workforce begin to realise that maintaining the status quo is not really the most cost-effective route to continuous improvement and do effectively challenge everything in a spirit of continuous improvement.
I believe that Brexit is a very expensive diversion that consumes our energies instead of using them to address the real underlying constraints to performance improvement. One day, however long it drags on, Brexit will mercifully be a thing of the past, but the needs of continuous improvement and ever-increasing need for quality productivity will still be going strong.
Daunting as such improvement often seems, nobody has to go it alone. There are companies out there like Roy McFarlane’s and Harford who are just waiting to bring some cost-effective help to your improvement objectives.