By:
- Jack Brereton MP, Stoke-on-Trent South
- Phil Atherton, Portmeirion
- Jason Simms and Andy Tooth, Heraldic Pottery/Duchess China
- Tony Kinsella, Lucideon
- Jon Cameron, Steelite
- Sara Williams, Staffordshire Chambers of Commerce
- Jonathan Gullis MP, Stoke-on-Trent North
- Jo Gideon MP, Stoke-on-Trent Central
Part 1: The challenges facing ceramics manufacturers in Stoke-on-Trent
Stoke-on Trent is world renowned for its ceramics industry. Our city is where the modern mass-produced pottery industry was founded by the likes of Josiah Wedgwood and Josiah Spode. To this day, names like Wedgwood and Spode are known around the world for their ingenuity and quality ceramics.
Sadly, the sudden global Covid pandemic hit our ceramics industry and our fantastic manufacturers now face major logistical and commercial hurdles as they try and recover.
They are struggling with cashflow. Orders have dropped significantly over the past few months and manufacturers are still having to fork out significant running costs on energy and equipment. More and more suppliers are asking for money upfront, and customers are finding it difficult to settle bills. On top of that, insurers are introducing surcharges to weather the risk to the economy, and businesses are worried about the potential impact of loan holidays and grants on their credit ratings.
Stoke manufacturer Portmerion says footfall is down by 50 per cent in its retail stores. Meanwhile Steelite who’s main market is hospitality, tells us orders have been 7 per cent of what they normally would be. Like many of our manufacturers, Steelite has significant levels of fixed costs such as its large factory set up to make 4,000 pieces a week, which at the moment does not make commercial sense to keep running.
Burdened by significant costs.
Staff wages, equipment and energy are the biggest costs facing our ceramics manufacturers, costs not faced by any of our international competitors. They are paying out millions during this difficult period.
Steelite’s top 3 costs are staff wages (65%), materials (21%) and gas and electricity (8.5%). In addition, they have a significant rental cost on their factory in Stoke-on-Trent, they shell out over half a million pounds on business rates for all their UK sites, and a similar amount on insurance. They have not qualified for any relief under the Covid business rate scheme as they are deemed to be a manufacturer even though they supply the global hospitality industry.
Lucideon employs 250 people and similarly their top 3 costs are staff wages (60%), equipment (20%) and energy (10%) – just these three costs alone total £13.5 million per annum.
Meanwhile Portmeirion’s workforce in Stoke is 604 people and they spend some £13 million on their top three costs – energy, materials and labour.
The general feeling in the industry is that the impact from Covid will last for at least the rest of this year, and likely well into 2021.
Part 2: The solution
Made in Stoke-on-Trent
British ceramics are the best in the world. And Stoke-on-Trent is at the heart of the British ceramics industry.
Our city’s ceramics are world renowned because of the raw materials used, over 250 years of perfecting the art of ceramic manufacture in bulk, and the craft skills passed down over many generations.
They are solid, durable, resistant to scratches, they are chip free and they do not stain. They are beautiful and they are built to last.
For example, the plates made in our city are designed technically to stack in a way that prevents them from rubbing against each other. They are designed to stack lower so you can fit more in a stack and in tight spaces in kitchens. And they are the best quality in the world. Steelite even offers a 5-year anti chip warranty (now extended to lifetime). The anti-chip guarantee means plates and mugs can withstand repeated cycles through industrial dishwashers.
For our businesses and households, this durability saves money in the long term.
Ceramics from Stoke-on-Trent will last much longer than those manufactured abroad due to their technical design. We need to champion our excellent ceramics industry and its world class products.
Let’s start with our own government.
Encouraging people and businesses to buy ceramics made in Stoke-on-Trent must be at the heart of our industry recovery plan – but we should lead with example with our own government and the wider public sector supporting homegrown industry. There are far too many examples where this is not currently the case.
Many millions of people work in ministerial departments, government agencies, the NHS and our police forces. 423,050 people work in our government departments and a further 1.3 million work in our NHS alone* – and we want them using beautiful and cost-effective plates and mugs made in Stoke-on-Trent. We need the decision-makers in these departments, responsible for purchases, to understand the importance of buying from Stoke-on-Trent.
I will begin with the Prime Minister and urge him to meet with our city’s fantastic, world renowned manufacturers.
Encouraging public demand through match funding.
We need to stimulate demand for our city’s high quality and long lasting ceramics products. The more orders our manufacturers receive, the more they make, earn, and employ.
Our city’s ceramics and hospitality sectors should work together to come up with a simple voucher scheme whereby consumers who buy ceramics products receive a voucher to dine out at a local restaurant. This would boost both industries and we can go one step further and persuade the government to match fund the sales generated.
If our retailers sell 100,000 plates at £30 each, they would raise £3 million. Match funding from the government would increase this to £6 million - saving jobs and livelihoods and boosting our regional economy. This would help offset the disproportionate energy and capital costs faced by these industries, giving the breathing space needed to reinvest. The people making the ceramics would of course pay income tax and NI – money going back to the government.
Recycle old ceramics through a scrappage scheme.
We must also encourage businesses to buy our city’s ceramics if we are to truly stimulate demand. A government scrappage scheme for the likes of our hotel groups, coffee chains, cruise liners and any other business that purchases mass-tableware, would help the industry and clean up the environment.
The government should develop a scheme whereby businesses are paid to send back their old cracked and chipped ceramics, and replace them with new high quality and long lasting items from Stoke-on-Trent. The waste could be recycled and reused, for example, as hardcore in road construction or turned into other ceramic products.
We would like the government to investigate a scrappage scheme whereby businesses are paid by the weight of ceramics they return. If we get this right, it would be a small investment which would once again increase orders, save jobs, and recycle tonnes of waste that would normally go into landfill.
Targeted tax breaks for businesses.
We’ve talked about businesses in the hospitality sector that purchase mass table wares such as coffee chains, hotel groups and cruise liners. Construction is another industry full of opportunities for our ceramics sector. It is rebounding after coronavirus and building homes is top of the government’s agenda. We are progressing towards building 300,000 new homes a year and this presents a huge opportunity for our ceramics industry to supply tiling for floors and walls, not to mention the demand from new homeowners wanting quality and long-lasting wares.
We must make it financially attractive for businesses such as our house builders to buy ceramics made in Stoke-on-Trent. One way is through including this in capital allowances, whereby a company can get tax relief on British ceramics expenditure by allowing it to be expensed against its annual pre-tax income. We must also look further at the unreasonably high taxes ceramics producers face on energy which means they find it much more difficult to compete internationally. Tax-reliefs to incentivise innovations that improve efficiency and help reduce energy consumption would be particularly welcome.
This would help our many local brick manufacturers, roof tile manufacturers and sanitaryware manufacturers too, all of which are key to developing new homes. British manufactures face a much greater burden of tax than many international competitors, reducing this burden would boost all manufacturing industries but especially energy intensive industries that have high cost overheads. A reduction in taxes on manufactures means supporting and growing skilled jobs.
Equipping the next generation with advanced skills.
Most people think of plates, mugs and tiles when they hear the word ‘ceramics’, however technical ceramics are increasingly being used across a world of other sectors. Whether it be in our modern gadgets or healthcare, from engine parts to insulators or even stents in heart operations, ceramics have an increasingly vital role to play.
They are strong and they can withstand high temperatures. This should be a great export success and we should be at the cutting edge, yet too often in technical ceramics the UK has fallen well behind our international competitors in countries like the US, Japan and South Korea. Investing in research and development will be a key part of delivering innovation, moving the industry forwards, and finding new ways in which we can use existing materials.
The future must be a combination of traditional, artisan and technical ceramics, more resilient than ever before. Just as there is a strong potential for British technical ceramic products, there is strength in the British ceramic brand throughout the world and growing opportunities for bespoke ceramic art.
And if successful, the industry will provide quality jobs and training opportunities for our young people, equipping them with advanced skills and keeping them in Stoke-on-Trent.
Boosting our regional economy.
Manufacturing is a highly specialised sector in Stoke-on-Trent and Staffordshire. Manufacturing and supporting services in our region have grown on average at a faster rate since 2009 than in the West Midlands and England as a whole.
Just our ceramics industry in Stoke-on-Trent and Staffordshire has 8,700 employees – 22 times more than the national figure. It is estimated that ceramics manufacturing in our area contributed £285 million of GVA to the local economy in 2014, and exports totalled £180 million in 2016.**
My ambition is for the industry to hit £1 billion GVA a year. To get there, we must act urgently to help this vital sector recover post-Covid, and we must make sure we can pass it on in a healthy state to the next generation.
Our recovery plan:
- Make the case for buying ceramics made in Stoke-on-Trent - and let’s lead by example with our government departments and government bodies.
- Stimulate public demand for British ceramics through a match funding scheme.
- Design a ceramic scrappage scheme with waste being recycled into alternative products.
- Target tax breaks for businesses in the construction and hospitality sector to reduce costs, support jobs and incentivise mass buying of British ceramics.
- Invest in R&D to support innovation especially in improving energy efficiency and growing technical ceramics in the UK.
- Grow export opportunities of British ceramics around the world.
Note: For this recovery plan, I talked to a range of ceramic manufacturers in the hospitality and giftware sector, and many of the recommendations reflect this. There are of course a wide range of ceramics companies in our city with similar concerns.
References:
* Workforce in our government departments:
https://www.instituteforgovernment.org.uk/explainers/civil-service-staff-numbers
* NHS workforce:
https://digital.nhs.uk/data-and-information/publications/statistical/nhs-workforce-statistics/march-2020
** Source: British Ceramics Confederation. Information supplied by Staffordshire Chambers of Commerce.