As we approach the general election, employers’ groups and think tanks are urging politicians and political parties to embrace the very worthy cause of UK manufacturing. Following a highly successful week of nationwide campaigning at the beginning of March, the Engineering Employers Federation (EEF) published a Manifesto for Manufacturing, which offers a few pointers to the next incumbent of Number Ten.
Ten years ago, the EEF warned that the UK’s economy was at a crossroads – we either grew our manufacturing base or suffer the consequences. Today, we are again at that crossroads, says the EEF, the recession having exposed the recklessness of an economy based on little more than debt. This has refocused attention on productive, high-value sectors with greater export potential.
The first 100 days of the new government will be crucial, says the Federation. As well as tackling the parlous state of public finances, the economy must be diversified – and that means a strengthening of our manufacturing base. It will require a shift in mindset and a loosening grip on time-worn strategies involving punitive taxation, which will only serve to reduce our international competitiveness, and restrictive regulation.
The EEF was not the only body prepared to issue a manifesto this month in the run-up to the election. The think tank, Policy Exchange’s latest report on manufacturing, which was released last week, urges the government to reiterate its commitment to an open economy, and thus reassure potential investors that the UK is open for business.
The report, Innovation and Industry: A Manifesto for Manufacturing, which is authored by John Willman, a former UK business editor at the Financial Times, urges ministers to refrain from intervening in bids for UK companies by foreign companies and instead be prepared to defend them by explaining the huge benefits to UK manufacturing by the openness of its economy.
With scarcely veiled references to the recent takeover of Cadbury by the US giant, Kraft, the report also highlights how the media and public have a skewed view of manufacturing. As coverage of the Kraft acquisition demonstrated, it suggests that the perception of manufacturing is frequently a negative one.
Moreover, Mr Willman slates his journalistic colleagues for promulgating myths about our manufacturing industry. The dyed-in-the-wool attitude of a largely London-based mass media is criticized, as is the tendency in newspaper articles and television documentaries to stereotype manufacturing as a dying, old-fashioned, badly paid corner of our economy that has little to offer other than an unpleasant environment in which to work.
The UK is still a major manufacturing economy - the sixth largest in the world. While manufacturing’s share of national income has steadily declined over recent decades, its output was steadily rising until the recession that followed the recent financial crisis. Mr Willman emphasises that manufacturers play a vital role in the British economy, offering well-paid work, and working environments that are cleaner than most offices because they have to compete on a global scale in the high-end manufacturing arena.
While media attention focuses on the sale of high profile British companies to foreign buyers, British buyers are also highly active in acquiring foreign businesses. Data on cross-border mergers and acquisitions supplied in the report show that in every year since 2000, the number of foreign businesses bought by British companies has been greater than the number of UK businesses sold to foreign companies. Over that period, the value of British acquisitions abroad has outweighed the value of British businesses sold to foreign buyers in five of the eleven years – and, so far, continues to do so in 2010. Mr Willman cautions against the protectionist sentiments that abounded in the wake of the Cadbury/Kraft deal:
“The UK excels in manufacturing for three reasons: the openness of the UK economy to overseas investors, the absence of state intervention in manufacturing since the 1980s, and a strong science and technology base. It is vital, as the economy struggles back to growth that we maintain all three to shore up our competitive manufacturing industry.
“The recent acquisition of Cadbury by Kraft highlights not just why we would be foolish to go down the road of protectionism, but also opens up the wider issue of the perception of manufacturing in the media and public eye.
“If we are to attract talent to, and support for, the industry we need to make sure a truer picture of manufacturing in the UK is being projected. At the moment, neither government initiatives, nor the way manufacturing is reflected in the media and popular culture is doing that.”
One key issue picked up in the EEF manifesto was the perennial shortage of workplace skills, without which no rejuvenation of our manufacturing industries will be possible. By its very nature, this shortage is not going to be resolved overnight, but the government continues to inject cash (albeit at drip feed rate) into the vocational training sector.
The latest announcement from the Department of Business, Innovation and Skills is a pledge of £12m of public funding (to be matched by the private sector) for new National Skills Academies covering five new sectors – rail engineering, logistics, green building services, biotechnology and composites. In addition, the National Skills Academy for Power is now ready for business, with a further £2.9m of government funding. Together, these academies are aiming to attract more than 300,000 learners to the programmes they oversee over the next four years.
That is all well and good, but the task of attracting youngsters to careers in product design and manufacturing starts at an earlier stage than that of the skills academy. In 2008 the government set out plans for changing manufacturing’s image, by setting up a new organisation to be called Manufacturing Insight. This was to make the public perception of manufacturing reflect the reality of a successful, modern and broad sector and ensure that young people were aware of the exciting career opportunities available.
However, a director of Manufacturing Insight was appointed only in September 2009, and few funds have been made available. Some18 months after its creation was announced, Manufacturing Insight’s internet presence is a reproduction of an eight-page glossy brochure, and there has been no discernible change in public sentiment about industry.
We clearly have some way to go. Let’s hope the coming administration is prepared to take up the challenges with greater zeal.
Les Hunt
Editor