UK productivity is suffering because firms are failing to implement lean manufacturing techniques as efficiently as their counterparts in the US, according to a controversial report by the Engineering Employers’ Federation, to be published on the eve of the Manufacturing Summit next week.
Only a third of UK firms are pursuing lean manufacturing across their entire organisation, while over 40% are not implementing the techniques at all, the report will show.
Many manufacturers do not understand ‘lean’ and are unable to implement it as effectively as US firms, says Dougie Peedle, EEF deputy chief economist.
Both managers and employers in UK firms are also resistant to change, meaning they are unable to reap maximum productivity gains from the new techniques, he said. ‘Within some companies, there is an inertia to change, due both to employee and management resistance.’
Employees are often sceptical, believing that any new initiative will mean job losses, and so resist the changes. Managers, aware of this resistance, do not implement the techniques as thoroughly as they should, said Peedle.
‘Lean is a word that can be used to mean different things – in some cases people use the phrase ‘leaner organisation’ to refer to the fact that they have simply reduced the headcount, but that is not what lean manufacturing is at all.’
It’s not about cutting jobs
In the US, productivity was boosted dramatically during the late 1990s without any drop in employee numbers. ‘Therefore, increasing people’s understanding of lean manufacturing should overcome the resistance of many employees to change.’
Skills shortages across all levels of UK firms are also preventing companies from effectively implementing lean techniques, he added. ‘There seems to be a weakness in lean skills at management, senior and shop floor levels. That’s when the intensity level starts to fall – when essential skills are not in place.’
Emta, the national training organisation for engineering manufacture, has drawn up new NVQs in lean manufacturing, and the organisation is hoping that additional money will be offered by the government to fund them, said Peedle. ‘Even firms that are already on the road to lean manufacturing would benefit from getting their people trained and back into the company having taken these skills on board.’ Peedle was at pains to stress the organisation does not see its report as condemnatory of UK manufacturing. There are some very good UK firms using lean manufacturing and other new techniques, he said, but the uptake of these throughout industry must be improved if productivity is to be increased.
‘We do not see this report as damning; we know there is room for improvement but you would expect that. What we are trying to look at is the ways in which we can improve – and what role government and employers might play in the process.’
While the report appears critical of UK manufacturers’ approach to lean manufacturing, the EEF recognises that many firms have been so hard hit by – and preoccupied with – recent economic developments and uncertainties over demand that they have not been able to devote any time to thinking about new techniques, said Peedle.
‘The volatility of the exchange rate has been a long-term problem for UK investment, but now we are so open to foreign competition – and our manufacturing base is so much more dependent on exporting – that volatility can now have an even greater impact on investment levels.’
The EEF is hoping to work with the DTI to raise the awareness of lean manufacturing within industry, building on existing structures such as the automotive sector’s Industry Forum and offering companies masterclasses in the techniques to explain their productivity benefits.
But first the government must recognise there is a problem that needs addressing, said Peedle. The EEF is not demanding large sums of money from Gordon Brown, he said, but rather wants the Treasury and the DTI to work with them to get results.
‘The chancellor talks a good game about manufacturing productivity, and we support a lot of what he is saying about how important it is for the economy, but it’s time for him to deliver.’