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Will Supply Chain Problems finish off the UK Car Manufacturing Industry?

In 1922, there were 183 motor companies in the UK: by 1929, following the slump years, there were still 58, with production dominated by Morris and Austin. In 1932, the UK overtook France to become Europe’s largest car producer – a position it held until 1955. In 1937, the UK produced 379,310 cars and over 100,000 commercial vehicles.

Production continued to grow, with the all-time high reached in 1972 when the UK built 1.92m cars. The record for this century was in 2016, with 1.72m cars. Since then, however, we have seen a sharp decline in numbers, with 2016’s figures halved to 860,000 last year. Last month brought the news that the UK had built 100,000 fewer cars than in the same period last year – meaning that we are almost certain to see another decline in overall numbers this year. 

Anyone who has watched a news bulletin will be able to list the reasons: first the pandemic, global supply chain problems and now rising energy costs. 

The main problem is the supply of semiconductor chips, which perform an increasing number of functions in cars, from airbags to emergency braking systems to the ever-more-common touchscreens. And as we move increasingly towards electronic vehicles we’re going to need even more chips. 

The problem is that the wait times for the chips are increasing, not decreasing, with the recent lockdowns in Shanghai – and the knock-on effects on the port there – having made the situation significantly worse. There have even been concerns expressed in the US that China is seeking to dominate and control the future supply chain for both electronic and autonomous vehicles. 

So where does that leave the UK car manufacturing industry? Aston Martin, Bentley, Rolls Royce and Jaguar all make cars in the UK – as do Nissan, who last year committed to a major expansion of their Sunderland plant, creating 1,600 new jobs. Overall, there are around 800,000 people employed in the UK car industry, so it remains vital to the country’s economy. 

The UK, though, is now a long way down the global league table, ranking 18th in 2021 – directly behind Slovakia and just ahead of Iran. Output in the top five countries – China, the US, Japan, India and South Korea – dwarfs that of the UK, meaning that the manufacturers of semiconductor chips have much bigger markets than the UK.

Given the demand for the high-end cars that the UK specialises in, we are not likely to see the industry disappear any time soon, but the longer the supply chain problems continue, the more vulnerable the UK’s car industry becomes. According to the Society of Motor Manufacturers and Traders, the industry has a turnover of nearly £80bn, adds £15.3bn of value to the UK economy and sees eight out of every ten cars produced exported. It’s an industry we cannot afford to lose. 

Sources
Wait times for semi-conductor chips increase due to China lockdown https://www.zerohedge.com/markets/wait-times-semiconductor-chips-rise-supply-chains-remain-congested
Ukraine war drives supply chain crisis https://www.zerohedge.com/economics/ukraine-war-revives-supply-chain-crisis
UK car production down as energy costs rise https://www.bbc.co.uk/news/business-61248689
China EV manufacturers grapple with rising costs https://www.zerohedge.com/markets/chinese-ev-manufacturers-grapple-rising-raw-material-costs-shrinking-margins
China looking to control global EV supply chain? https://www.zerohedge.com/markets/chinese-regime-seeks-control-global-ev-supply-chain-leaving-us-vulnerable-experts
Statista https://www.statista.com/statistics/298923/total-number-of-cars-produced-in-the-united-kingdom/
Wiki https://en.wikipedia.org/wiki/Automotive_industry_in_the_United_Kingdom#:~:text=In%201932%2C%20the%20UK%20overtook,cars%20and%20113%2C946%20commercial%20vehicles.
League table https://en.wikipedia.org/wiki/List_of_countries_by_motor_vehicle_production

No longer a nation of shopkeepers?

Napoleon is often quoted as deriding Britain as ‘a nation of shopkeepers.’ In fact, the phrase was first used by the French Revolutionary, Bertrand Barère de Vieuzac in 1794 – and while the phrase may have been intended as an insult, there’s another side to the coin: hardworking, local, small-scale enterprises that served the community and provided jobs. 

But is that now coming to an end? 

According to analysis from Rest Less – which offers advice to older people – two years into the pandemic the UK has nearly 700,000 fewer self-employed people than at the peak in 2019. Two years ago there were 5m self-employed: that figure has now shrunk to 4.3m. 

It has to be said that changes to legislation have seen many previously self-employed contractors move to company payrolls, but that is still a significant drop. 

So has the UK lost its entrepreneurial spirit? Clearly a ‘nation of shopkeepers’ could now be interpreted as a nation of artisan bakers, web designers, photographers, hairdressers and a host of other professions. But the question remains: has the pandemic made people in the UK more security conscious – less willing to take the risk of ‘going it alone’?

The analysis from Rest Less shows that the number of self-employed workers fell across all age categories in the past two years, apart from those in their 70s and 80s. Interestingly, the 50-59 age group has more self-employed workers than any other age group. 

Stuart Lewis, founder of Rest Less, said, “The self-employed workforce has gone through a tumultuous couple of years [but] self-employment remains an attractive option for many workers in their 50s, 60s and beyond.” 

It is easy to see why younger people – with mortgages to pay and families to raise – will find the security of employment attractive in the current climate. It is also easy to see why self-employment is attractive later in life, especially if you have been offered an early retirement package. At that stage of life, perhaps the mortgage is paid off and the children have left home. 

Some of our more mature clients have gone down that route, now doing the job they were previously doing as an employee on a self-employed, consultancy basis. One thing we would stress though, is that going self-employed – at any stage in life – requires careful financial planning. There are clear implications for your pension and for taxation. There are questions around whether you trade on a self-employed basis or set up your own limited company. If you’ve taken a lump sum as part of a redundancy package, there may also be investment considerations. 

Moving from being employed to setting up your own business is a tremendous – and exciting – challenge. But it may represent a major change to your long-term financial planning goals. We are more than happy to talk through all the implications with any clients or potential clients who might be considering taking that step – whatever type of ‘shop’ you are planning to open…

Sources
https://www.cityam.com/pandemic-kills-off-entrepreneurial-opportunities-as-army-of-self-employed-in-uk-drops-by-shocking-700000/

Government urged to ‘Unlock the Flexibility in Every Job’

With the government again encouraging people to work from home as the Omicron variant continues to spread across the UK, many will be thinking about the battles they’ve had with their employers in the past to enjoy some form of flexible working.

Some will have only been offered flexibility after they’ve been in their job for a particular length of time, and some will have been urged to go back to the office post lockdown despite being happier and more productive working from home.

But as the pandemic continues and more and more employees feel able to demonstrate they can work effectively away from the office, the government is under pressure to formalise this working option.

The TUC has called on the government to place a new duty on employers to include flexible working options, such as remote working and flexi-time, in all job adverts. Any new recruit could then take up these options from their first day, unless their employer can justify why this isn’t possible.

If this does happen, the TUC believes employees should then have a right to appeal, and be able to ask for flexible working arrangements as many times as they wish within a year.

The TUC’s call to ministers came after a survey it commissioned found that 78% of HR managers believe it would be easy to include home or remote working in job ads, or that they do it already.

Figures also showed that 70% of HR managers have already put significant flexible working arrangements in place, or believe it’s viable for their business.

But despite this high level of support for flexible working options, only a quarter of jobs currently being advertised have them listed.

Furthermore, only one in four HR managers surveyed by YouGov for the TUC said they wouldn’t offer significant flexibility to their staff following the pandemic.

Frances O’Grady, general secretary of the TUC, acknowledged that the legal right to request flexibility has been in place for about 20 years, but believes the current system is “broken”, and that government action is needed to deliver “practical changes for workers”.

“During the pandemic, many people were able to work flexibly or from home for the first time,” she commented.

“Staff and bosses both saw the benefits this flexibility can bring, but the current system is broken. A right to ask for flexible working is no right at all – especially when bosses can turn down requests with impunity.”

Ms O’Grady argued that attitudes to different types of flexible working have changed significantly throughout the pandemic, and ministers should “take advantage of this”.

She added that offering genuine flexibility to workers could help close the gender pay gap, keep mums in work, help disabled workers and carers stay in employment and enable dads to spend more time with their kids.

Whether the changes in our working patterns that have been driven by Covid will lead to lasting changes in the law remain to be seen.

But the pressure on policymakers and employers to acknowledge the changes that have happened in people’s lives over the last two years, and move forwards rather than backwards, will continue to grow.

Offering flexible working options could be crucial if businesses want to be seen as progressive organisations that care for their employees. And after almost two years of Covid-19, when many people have worked successfully from home, and even been promoted or started new jobs remotely, it could be very hard for many businesses to make the case that flexible working doesn’t work for them.

Will the Pandemic mean the end of Mentoring?

Mentor. We’ve all heard the word – but who was he? In Greek mythology Mentor was a close friend of Odysseus. While Odysseus was away fighting the Trojan War he placed his son Telemachus in the care of Mentor. When the goddess Athena visited Telemachus to give him advice, she took the form of Mentor. 

Since then, of course, ‘mentor’ has become a widely used term in English and other languages, signifying an older, experienced person who imparts wisdom and advice to a younger and less experienced colleague, with the modern usage of the term going back to the 17th and 18th Centuries. 

Virtually everyone who has been in business for any length of time has received mentoring in their early days – and gone on to later act as a mentor to someone younger. But since the pandemic, with so many working from home, it’s not so easy to say ‘have you got a minute, boss? I need to pick your brains…’ 

Will WFH spell the end of mentoring in British industry? And will we all be worse off as a result? 

There’s no question that WFH will mean the next generation will not have the same easy and immediate access to expertise and experience that older workers had. So unless the knowledge is going to be lost to industry, it is vital that HR departments and senior managers find ways to teach and connect with their younger colleagues – even when they aren’t in the same room. Not only do they need to pass knowledge on for the benefit of the company or organisation, the Millennials and Generation Z cohort, now making up the majority of the workforce, consistently identify ‘personal and career development’ as one of the key things they want from an employer. 

The important thing for both mentor and mentees to accept is that while a mentoring relationship can still work remotely, it is going to be different. The relationship is going to be more formal and calls will need to be scheduled – but it can (and does) still work. Both sides need to know what they want from the mentoring relationship – and, just like in the old days, it will need to suit the personalities of the people involved. Some younger members of staff will want to be free to make their own mistakes, others will want more regular supervision. Trust will be crucial, and results will gradually build. 

The pandemic will change many things about the world of work, but we doubt that it will change the basics of mentoring – the need to learn from older colleagues and the rewards those mentors get from passing that knowledge on. The way it’s delivered may well change with technology and post-pandemic working patterns – and who knows, if the much-touted metaverse takes over the world of work we might all have virtual mentors in the future…

Will you do your weekly shop at Amazon?

Traditionally the UK food market was dominated by the ‘big four’ – Tesco, Sainsbury’s, Asda and Morrisons. They were other players – such as Co-Op, Waitrose and smaller, regional supermarket chains – but by and large the ‘big four’ were unchallenged.

Then the discounters, Aldi and Lidl, arrived, inexorably eating into the market share of the suddenly not-so-big four. Aldi and Lidl quickly topped the rankings for ‘most popular British brands’, comfortably beating ‘traditional’ names like Marks and Spencer and John Lewis. 

But now it appears that they are all under threat from a new entrant to the market – one we have all heard of, and that’s already had a huge impact on British shopping habits. 

Amazon has announced detailed plans to enter the UK supermarket sector. Two hundred and sixty supermarkets owned and run by Amazon are to be opened before the end of 2024, as it meets retailers like Tesco and Sainsbury’s head-on. Amazon has already poached one of Tesco’s former top executives to run its physical stores, all of which will apparently be ‘cashierless’. 

Amazon already has six ‘Fresh’ grocery stores in the UK, offering customers a different way of shopping. Customers scan a code as they enter the shop – and then simply put items in their bags. Cameras and sensors detect what they have picked up off the shelves – and the customers then just walk out with their goods. The bill follows, sent directly to their Amazon accounts. 

Retail analysts have described Amazon’s move as ‘typically bold and aggressive’. Research recently quoted in City AM suggested that Amazon is on course to overtake Tesco as the UK’s largest retailer within the next four years, with sales expected to reach more than £77bn by 2025. Last year Amazon’s sales were £36.3bn – well below Tesco at £64bn. Analysts are expecting 3.5% annual sales growth from Tesco, taking their sales to £76.1bn – not enough to stay ahead of Amazon. Sainsbury’s is expected to hang on to third place, with sales projected to grow by 4.5% and reach £42.2bn by 2025. 

You will no doubt have your own thoughts on whether this move from Amazon is a good thing or a bad thing. Is the company responsible for the decline of our high streets? Or is this the fault of business rates? Does the blame lie more directly with the retailers? As usual the real answer is a combination of factors: what is undeniable is that Amazon’s entry into the supermarket sector – combined with Lidl’s plans to ramp up UK store openings – will lead to big changes in the way we shop and the retail landscape. 

One thing is certain. Customers will find the idea of packing items directly into their bags and then simply walking out of the store very attractive. After all, we’re coming up to Christmas: we all know the struggle to keep up that festive feeling when standing in an impossibly long queue at the checkout…

Seven in Ten of us Want a Career Change: Where does that leave Employers?

There is no doubt at all that the pandemic, and the measures taken to counteract it, has impacted people’s mental health. That is true not just in the UK but around the world – and with the threat of yet another wave this winter, the situation could well get worse before it gets better.

Unsurprisingly, many people used lockdown to re-evaluate what they wanted from their life and their work. Last summer, the Independent reported that half the workforce in the UK was considering a change of job – with the medical profession, teaching and landscape gardening top of the wish list. The general feeling was that ‘life was too short’ to be doing a job people didn’t like. 

It would be easy to dismiss that as an initial reaction to the pandemic and lockdown. By early 2021, however, even more people were looking to change jobs, with the website Totaljobs.com reporting that more than 70% of people wanted a change of direction. Flexible working, the option of being able to work from home and working for a company that ‘shared my values’ were all high on the list of boxes to be ticked. 

So far, so understandable – but if we look at the situation from an employer’s point of view it is very worrying. ‘The war for talent’ has almost become a cliché among HR professionals and employers are going further and further to recruit and retain the best people. 

One UK company – London stockbroker Finncapp – is set to offer the ultimate employee perk from next year, in a bid to counter staff burnout. The company will offer unlimited holiday, with staff having to take a minimum of four weeks leave, plus ‘two or three days’ every quarter. Unlimited paid leave has to date largely been the preserve of US tech companies, but it is gradually starting to appear in the UK. 

One of the early pioneers of the practice was Netflix (named one of the world’s best employers by Forbes) with staff allowed to take as much holiday as they want. Days off are not tracked: it is purely down to individual employees. 

In theory the practice should work well – but in practice many firms have found that staff actually took less time off. As Rishi Sunak recently commented, the people who tend to get promoted are the ones that are in the office. 

It is undeniable that the pandemic has brought changes in working practices that are not going to go away. Young people entering the workforce want very different things to their parents’ generation. The problems for employers will persist – but so will problems for employees. We are clearly going to see more people changing jobs in the future. They will work for a variety of different employers and may well have career gaps. That is going to make financial planning around areas such as pensions and mortgages more important than ever. 

Remember that we are always here to answer your questions: whether that is about your own career and financial planning – or the future careers of your children.

Business Leaders and Staff Split on post-Pandemic Challenges

The pandemic has shifted the dial considerably in terms of what many people want and expect from their employer.

For many, being forced to work from home has been a game-changer, and lots of people have discovered they really like the better work-life balance it has given them.

The pandemic has also placed a renewed focus on health and safety for those who continue to go to the office or simply can’t work from home, as they want and expect their employer to take reasonable Covid precautions.

But a new study suggests that while the issue of keeping home-workers satisfied is high on the agenda for both bosses and members of staff, the same can’t be said for health and safety matters.

Research by Sapio for WorkNest HR found that senior leaders believe there are three key business challenges resulting from the pandemic. These are keeping staff happy (14.5%), increasing staff turnover (12.7%) and involving home-based members of staff (11.2%).

Employees agreed that involving home workers was important, with 13% saying this was a challenge for the future, while 12.5% cited keeping staff happy as a big issue.

But interestingly, 11.6% of workers cited protecting health and safety as one of the top three issues for businesses in a post-pandemic world.

It’s clear that as employers start pushing for members of staff to return to their premises, even on a hybrid rather than full-time basis, many members of staff will be seeking reassurances that their premises are as Covid-safe as possible. 

Yet the findings suggest that this depth of feeling isn’t something that many bosses are either aware of or doing anything about.

This could have a big impact when it comes to staff retention, as again, employers and employees are split on the issue of whether firms reacted to the pandemic well.

Some 64% of bosses said they believe staff have become more loyal because of how their company responded to the Covid outbreak. 

But only 45% of workers said they feel their firm has handled the pandemic well, and 23% feel less loyal because of their Covid response.

It’s good to see that many employers are thinking of homeworkers and aware of the importance of keeping them happy and involved at work.

However, some may be running the risk of not considering the needs of those who can’t work from home or are expected to go back to the office after 18 months of working remotely.

A company’s health and safety record, and its Covid policy in particular, could become a big issue that affects its reputation as an employer and its ability to attract and retain talent.