Ritika Janiya
A major British manufacturing company, Connectix Cabling Systems, has announced that it will be closing its four factories in the UK. This decision follows the recent changes made in the UK government’s budget, which have raised taxes and wages, making it impossible for the company to continue operating in Britain. This marks the first business to stop UK production due to the new policies introduced by Chancellor Rachel Reeves.
Why Is Connectix Moving Production Abroad?
Kevin Hancock, the Managing Director of Connectix, explained that the company could no longer afford to keep manufacturing in the UK due to the rise in National Insurance taxes and the increase in the minimum wage. These costs have become unsustainable, especially for a company that specializes in making fibre optic cables for internet providers all over the world. Because of this, Connectix has decided to move its production to countries like India or China, where manufacturing is cheaper.
In 2023, Connectix reported earnings of £50 million. Despite its large profits, the company now finds it necessary to shift its production overseas. The company, which is based in Essex, currently employs 150 workers in the UK, and it plans to continue to provide different job roles for those affected by the closure. However, most of the company’s manufacturing jobs will be moved to India and China, where Connectix already works with about 400 indirect employees.
Challenges Faced by Connectix Over the Years
Connectix has a long history of challenges and growth. It was founded in 1993 by Kevin Hancock when he was just 25 years old. Coming from a humble background, Hancock built the company up from scratch, overcoming several financial difficulties along the way. The company gained recognition as one of the UK’s most promising businesses for the future, even winning an award from the Daily Mail in 1999.
However, it wasn’t always easy. In 2008, during the global financial crisis, Connectix had to close one of its factories and let go of 175 workers. Despite this setback, the company managed to keep some of its production in the UK. That is, until now, when the increase in costs from the government’s new policies made it impossible for Connectix to continue operations in the UK.
The Impact of Labour’s Policies on Manufacturing
Hancock explained that the sharp rise in the minimum wage—by 10 percent last year and 16 percent over the past two years—has placed a heavy burden on businesses like Connectix. He also pointed out that the rise in National Insurance taxes, which employers have to pay on their workers’ salaries, has been “massive” and is affecting the company’s ability to stay competitive. These rising costs have made it impossible for the company to keep its production in the UK, and the decision to move to India or China is the result.
Hancock warned that manufacturing in Britain is dying because of these cost increases. “There’s a cliff coming for manufacturing. Manufacturing in Britain will die. It has already died, in my view,” he said. He believes that the government’s policies are pushing businesses like Connectix out of the country and making it more difficult for British manufacturing to survive.
Labour’s Approach to Business Under Criticism
Kevin Hancock did not hold back in his criticism of the government’s approach to business. He stated that the Labour Party, led by Chancellor Rachel Reeves, sees businesses as a source of money for the government rather than as partners that help create jobs and wealth. According to Hancock, the government needs to stop using businesses as a “cash cow” and start recognizing the important role that businesses play in the economy.
Hancock also suggested that the Labour Party’s lack of experience in running businesses was a key reason for the problems. He argued that the government doesn’t understand the difficulties of running a company because its leaders have never been in charge of a business. “They don’t know what it’s like,” Hancock said, adding that the government needs to listen to experienced business leaders for better advice.
What Happens Next for Connectix?
While Connectix’s decision to move its production overseas is a significant one, the company is not abandoning its UK workers entirely. The company has promised to find other job opportunities within the organization for its 150 employees. However, with most of the manufacturing moving to India and China, it is clear that the company’s operations in the UK will be reduced dramatically.
Connectix is not the only company facing these challenges. Many businesses in the UK have been expressing concerns about the rising costs of doing business, including the increases in wages and taxes. These businesses are now considering moving production abroad to places where labor and manufacturing costs are lower.
The Future of Manufacturing in the UK
The closure of Connectix’s factories is a worrying sign for the future of manufacturing in the UK. For years, the UK government has pushed for more local production, but rising costs are making it difficult for businesses to remain in the country. If other companies follow Connectix’s lead, the UK could see a decline in its manufacturing sector, leading to job losses and reduced economic activity.
To avoid this, experts believe that the government needs to rethink its approach to business and manufacturing. By lowering taxes and reducing the burden on businesses, the government could help companies remain competitive and keep jobs in the UK. Until then, it seems likely that more businesses will look abroad for cheaper places to manufacture their products, and the UK’s manufacturing industry may continue to shrink.
