UK government policies towards manufacturing and retail power are the major concerns of the UK packaging manufacturing and machinery sectors, according to a recent survey.
The UK Packaging Business Confidence Survey 2003, which sought the views of 100 senior managers and directors within the UK packaging industry, found that government policy is eliminating the ability of manufacturers and retailers to pass on price increases, exerting an unsustainable pressure on margins.
Some 46 per cent of those questioned reported increased sales volumes in the preceding 12 months, but a clear indication of the additional pressures came with just 20 per cent having registered an upturn in margins and 40 per cent reporting a negative year in the margin column.
A significant 93 per cent believed that the UK government is not doing enough for the industry, citing a lack of understanding of the impact of new regulations, taxes, costs and bureaucratic burdens emanating from both the UK and EU governments.
A damaging 59 per cent feel that the UK is no longer a “good place to invest”, again blaming the lack of governmental support, as well as relatively high labour costs.
Ian Dent, chief executive of the Packaging Federation, said: “If packaging manufacture is to remain a viable part of the UK economy, it is vital that some constructive dialogue takes place with the DTI on the issues identified in this survey and the earlier competitiveness study on the sector. We need a strong champion within the DTI to work with the industry, not against it, as we so often feel is the case.”
The strength of the pound against the euro was considered detrimental to the sector by 52 per cent, although respondents were unsure on the viability of joining the single currency. 31 per cent felt that the UK should sign up immediately, while 35 per cent said the UK should never join. 22 per cent, however, favoured the option of joining within the next three years.
Two-thirds felt that there will be further consolidation, through merger and acquisition, in the packaging sector, and eastern Europe was pinpointed as the place to sink investment money into in the near future. Asian countries, with the notable exception of Japan, were also highlighted as having potential.
Dent added: “Packaging is a barometer of the economy, and this survey reflects that by echoing comments voiced by manufacturing in general over its lack of attention by the government, the impact of the two-speed economy as reflected by the retail sector here, and the important issue of inward investment. I hope that we may continue with this dynamic exercise to supplement the usual annual historical market data.”
• The respondents were interviewed by Landell Mills Consulting during September and early October 2003, using a structured questionnaire compiled in conjunction with the Packaging Federation, Total processing & Packaging 2004 and MMAssociates. Eighty-two per cent of respondents were representatives of the packaging materials and containers sector and 18 per cent machinery companies.
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