UK needs to invest more

Malcom Taylor, president of the MTTA on evidence that the UK is way behind in capital investment league tables

The Machine Tool Technologies Association represents manufacturers and importers of machine tools in the UK, and has an excellent vantage point from which to monitor the performance of the sector’s manufacturing customers in terms of capital investment in machine tools.

The association firmly believes that the UK’s investment levels lag behind other competing nations it imports to and has made this generally known.

As the issue is of such national importance it commissioned an impartial survey to substantiate the claims.

Oxford Economic Forecasting was commissioned to research and analyse the UK’s investment performance and compare the UK’s performance against competing nations.

The results, The UK’s Investment Performance: the Reality confirms that the UK has under-invested in the past and is continuing to under invest today.

We fall significantly short of competing nations. The MTTA is also particularly concerned about the lack of investment made by small and medium sized companies and by the lack of action to encourage innovation and technical advance in UK manufacturing.

League tables show the UK to be particularly lagging behind with regard to the amount of capital stock invested per worker, which is much lower than any of our major competitors, including Taiwan.

The problem with the UK’s investment performance is not that a low investment share in GDP means relatively low trend growth; rather, it is that our investment share in GDP is still not high enough to bring the capital-labour ratio more in line with that of our competitors, resulting in our living standards continuing to fall further behind.

The MTTA believes strongly that investment is not just about machinery and equipment. Investment in people is equally important and the study highlights specific weaknesses in the UK education system. A shortfall in basic literacy and numeracy, combined with poor quality technical training and lack of apprenticeships, has already resulted in a shortage in the skilled labour market. The MTTA has been taking measures to address this problem by trying to attract young people into a career in manufacturing, but more needs to be done by the authorities at a basic level.

From the results of the report and its comparisons with other countries, it is clear that the UK will remain in the lower end of the investment league tables unless measures are taken to improve capital spending.

Investment must be continuous, whether it is in education, innovation or technology, if the UK is to prosper into the next century.

The MTTA has produced the evidence to help understand what is needed to grow manufacturing’s contribution to the economy, especially in an era when the use of technology has never been so apparent.

We need to develop a whole culture shift in our attitudes towards investment and the MTTA sincerely hopes that this report, having identified our national position, will accelerate change.