Section:GDN 1N PaGe:18 Edition Date:190827 Edition:01 Zone: Sent at 26/8/2019 17:18 cYanmaGentaYellowb
- The Guardian Tuesday 27 August 2019
(^18) National The recession risk
Day two: industry
Steven Morris
M
aps of the US
and Canada dot
the wall above
Steve Ahearne ’s
desk at Pinpoint
Manufacturing
in Swansea, south Wales. The
company, which produces tough,
high -quality bags for lifting tools and
components mainly for the wind
turbine industry, has ambitions of
expanding into North America.
“In an unhindered world, we’d
be looking to crack on and truly go
global,” he says. “As it stands, we’re
a bit unsure, nervous about how
we should be investing. We want to
expand but we may have to delay.
“Our order books are a bit quieter
than we’d like them to be and our
investment plans are up in the air.”
The reasons for the hesitancy
are two fold: uncertainty over what
shape Brexit will take , but also the
growing concern that recession
could be just around the corner.
“It’s got quieter of late, especially
last month,” says Ahearne, the
fi rm’s general manager. “But there’s
historically a lull for us in July.
August is better but it’s not where
we’d like to be. We had a rush prior to
the original Brexit date [29 March ].
We did see more EU customers
coming in the month before that- stockpiling. We did the same. We
were stockpiling raw materials.”
But the company hasn’t seen the
same rush ahead of the 31 October
date. “I don’t know if it’s because
customers already have what they
need. Part of the problem may be
‘the boy who cried wolf ’ syndrome.
Are people thinking, does this date
mean anything? Or are they thinking
that recession could be coming?”
Ahearne is pretty certain an
offi cial recession is on the way as
the pound weakens and economies
struggle across the world. “It looks
like global recession is looming,”
he says. “We sell a lot to renewable
energy in particular. Any reduction
or delay in investment in that sector
has a knock-on eff ect for us.”
He thinks that if there is a no-deal
Brexit, tariff s could push up the
price of Pinpoint’s goods. “That’s
very diffi cult. We’re not in a position
to swallow that. We certainly don’t
want to reduce the quality of our
goods, that’s not the point of what
we do. We don’t want to be saying,
‘we make the second -best product
on the market’. It is frustrating.
“If we didn’t have Brexit coming,
the government would be more
by a team in another. Two -thirds
of the bags remain in the UK and
almost all the rest head to the EU,
mainly Denmark and Germany. A
few are also sent to the Caribbean.
When the Guardian visited, bags
were about to be sent off to two very
diff erent places – Great Yarmouth in
Norfolk, and Trinidad and Tobago.
The company remains relatively
small – just 13 employees – but is
successful, counting blue-chip
companies including Siemens and
E.ON among its customers.
It uses high-quality materials
( even the cotton used for the
stitching is durable) and each bag
has a serial number for traceability.
One problem is that the bags tend to
last – which means the fi rm needs to
fi nd new markets for them, hence
the maps on Ahearne’s offi ce wall.
The company has been undertaking
a research project funded by the
Welsh government – with the helpManufacturing Welsh factory holds
back on expansion over tariff fears
of EU cash – to investigate those
possible new markets. “We’re
looking for a route into North
America but we don’t just want to
fl ap at it. We’re too small to be able to
throw a large amount of money and
hope into it,” says Ahearne.
One option might be to set up
a base in Canada to try to take
advantage of free trade agreements
between there and the US and
Mexico. But they may also have to
move some operations to Europe
to tackle the problems a no-deal
Brexit could create. Donald Trump’s
scepticism towards renewable
energy is also worrying. “He’s so
capricious – you never know what’s
coming next,” says Ahearne.
“We’re trying to be as resilient
as we can. Being small, we can be
relatively fl exible. We can react
to the market quicker than bigger
companies. On the other hand, we
are limited in the amount of storage
space we have.”
The Crofty estate (originally an
ammunition dump in the second
world war) has been doing well since
the last recession. Six or seven years
ago, most of the units were empty.
Now the estate is thriving, with
goods ranging from surfb oards to
oak fl ooring being produced there.
But businesses are tightening
their belts, not expanding, not
taking new staff on. Local hoteliers
report that bookings from EU
nationals are down and the sheep
farmers who rear lamb on the salt
marshes are concerned that Brexit
and recession will hit their markets.
Ben Cottam , the head of external
aff airs for the Federation of Small
Businesses in Wales, says confi dence
in manufacturing had slowed.
“We’re seeing a dip in confi dence
as the quarters go past,” he said. “It’s
not entirely as a result of Brexit; it’s
also fuelled by concerns about the
global economy. People are putting
off capital investment, people are
putting off recruitment for new
roles. People are waiting to see how
things play out.
“They want to see if there is a
shift back in the global economy
before they commit signifi cant
expenditure. Businesses are being
cautious. It’s more about what
people think is coming rather than
what is there now.”
Cottam points out that almost
two -thirds of Welsh manufacturing
exports go to the EU but the
rumblings over a possible recession
in the US – another key market for
Welsh industry – are also hitting
confi dence. “It’s an uncertain
future. It takes a big leap of faith to
do something dramatic.”
Back at Pinpoint, there is a
pause in the clatter of the sewing
machines. The workers are not
taking a tea break but meeting to
fi nd out how they could become
more effi cient. Ahearne believes the
Welsh government and businesses
have worked hard to promote the
country on the global stage. “There’s
evidence there’s a real will and
desire to push Wales on to the global
scale, but things like recession and
Brexit puts us back again. People are
spending time consolidating rather
than growing.
“There’s a lot of other stuff – social
issues – we could have been dealing
with rather than looking into the
jaws of recession and Brexit.”‘Without Brexit, the
government would be
more focused on the
climate emergency,
the drive to be green’Steve Ahearne
Pinpoint general managerfocused on the climate emergency,
the drive to be more green.”
Pinpoint was created in 2006
when one of its founders, with a
background in the leather industry,
spotted a gap in the market for
strong, safe, long-lasting bags in
the renewables sector. The bags are
used to move anything from tools
to generators and sections of wind
turbine blades. Pinpoint is also
sometimes asked to make canopies
for shops and covers for golf buggies,
and even to mend awnings following
particularly windswept camping
trips on the nearby Gower peninsula.
Half of the fi rm’s workers are
non-UK EU citizens – it is hard to
fi nd local people with industrial
sewing skills – and half are local.
The company is based on the Crofty
industrial estate on the banks of the
River Loughor. Sheets of brightly
coloured high-tenacity polyester are
cut in one of the buildings and sewn A worker makes a high-strength
bag, often sold to the wind turbine
sector to lift heavy equipment
PHOTOGRAPHS: DIMITRIS LEGAKIS/THE GUARDIANIn numbers
2.7 m Employed in manufacturing.
13% Fall in manufacturing output
in real terms during the 2008-
recession (6% for the UK economy).
£33,000 Average gross annual pay
in manufacturing.
9th UK’s place in the league table of
leading manufacturing nations.
10% Sector’s percentage of GDP.
Brexit impact? The UK’s decision
to leave the EU could have a big
impact on manufacturing. For
example, changes in the trading
relationship between the EU and
UK could increase the complexity
of trading , but the ability of the
UK to negotiate trade deals with
third countries could help open
markets currently unavailable
to UK manufacturers, a House of
Commons briefi ng paper says.In our second report on
signs of an economic
slump, we visit a fi rm
making industrial bagsRELEASED BY "What's News" vk.com/wsnws TELEGRAM: t.me/whatsnws