Opinion from Lord Digby Jones

Manufacturing Matters

Published Wednesday 14 October, 2009

After some twenty years as a business lawyer in Birmingham, acting for so many companies in the industrial heartland of the Nation and helping them export their goods all over the world together with working through the recessions of the early eighties and nineties; after six-and-a-half years as Director-General of the Confederation of British Industry and some fifteen months as Minister of State for Trade and Investment in the "Government of All the Talents" where in both positions I visited over seventy countries banging the drum for UK Business and learning just how little is the credit we give ourselves for what our businesses do around the globe; and being born and raised a spanner's throw from "the Austin", the huge car plant in Longbridge, Birmingham, it would be fair to say that I have manufacturing running through my veins.

So I read about the US Corporation Kraft's plans to take over Cadbury with considerable alarm. I have no relationship (paid or otherwise) with Cadbury whatsoever and it is, indeed, more than emotional sentiment that has caused me to put pen to paper. As kids in Brum, we all loved Cadburys; who wouldn't! But Birmingham loved Cadbury's for reasons other than tasty, scrumptious ones. They were the best employers around. They cared. My mates would say "Dad (or often even fifty years ago, "Mum") works at Bournville" with such pride. They were proof you can build a globally successful business, an enduring and instantly recognisable brand, make serious money and yet be a good boss, look out for training, healthcare, pensions and recreation in the workforce. But I fear that, if Kraft succeed in their aims, they will be stealing something from us as a nation (especially at the current offer price!) that we will never replace. They need Cadburys a fair bit more than Cadburys need them. Suborn a focussed, dedicated, global business into a conglomerate and the very things which make Cadbury special will over time disappear; if you think I'm wrong, just ask the people of York about the enduring consequence of Nestle taking over Rowntree.

All my adult life I have believed in something I call socially-inclusive wealth creation. It is possible to create wealth (and lots of it) but also be an agent for good in our communities. "Capitalism with a human face" if you like. Train your people, be sensitive to your environment, be responsible with your supply chain, show (and not just talk about) that your care for your employees does not end as the shift leaves the factory gate. Use your position in the locality, your brand with people, your clout and your financial muscle to reach out, down, round and under those who can't in our society, but be living proof that for the Good Samaritan to do good, he had to have a few bob in his pocket! For me Cadbury epitomises all of that. And it is all of that which, no matter what assurances are received or, indeed, even meant at the time, would be lost if one of our great manufacturers were to become Kraft UK Chocolate Facility (Birmingham) Inc.

I guess I am talking about values.

And in these uncertain times, at these moments in our history of insecurity and questioning our very position, when bonds of trust between Bank and Customer, between Politician and Voter have been jolted possibly (but hopefully not) irretrievably, people look to the dependable rocks in their lives. Their families, their faith; but also business. It employs people, it delivers the dosh at the end of the week, it trains them, it often provides a social life, and manufacturing gives people a sense of purpose, that they are adding value to the Nation's coffers, … in short … they feel needed.

If our country is going to pull itself out of its economic woes, it is going to have to trade itself out of them. So manufacturing matters. Over 85% of exports are manufactured goods. We are still a massive exporter of cars; around half of every Airbus that flies (engines- Derby, wings-North Wales, undercarriages-Gloucester, avionics-Bristol) is made in Britain; we are a major pharmaceutical manufacturer; our food and drink manufacturing is a major export around the world. Defence and security equipment, electrical equipment, medical kit; you name it, if it's at the value-added and not the commodity (selling on knowledge-application and not just price) end of the market, if it's innovative and selling a reputation for branded quality, the UK makes it, sells it around the world and earns Britain her way in the world.

But to put the ball in the net we need a Government that shows by what it does not just by what it says that it cares about manufacturing. We have had loads of initiatives announced but ask any manufacturer, have they made a difference on the ground? …No! " Real engineering not financial engineering" said Lord Mandelson; his Government is so terrified of the "British Leyland Bail-out" headline that they would prefer to see skilled workers leave manufacturing for good rather than keep the UK reservoir of skilled labour topped up and invest in our future. Of course the Banks had to be bailed out; it was certainly in the national interest to do so. Financial Services matter hugely to our country and Lord Turner is wrong in saying that parts of that sector are socially useless (since when has a sector that delivers nearly a fifth of all business taxation in the land that pays for schools and hospitals and armies been socially useless?). But getting behind tomorrow's manufacturing, really incentivising training and research and overseas sales, would cost us, as taxpayers, a drop in the ocean compared with the help meted out to the banks and it would all be an investment, not a cost, anyway as the world-class goods produced would sell around the world earning the cash for the nation to repay its indebtedness.

The protectionism and subsidies of other countries is rightly criticised by everyone but we are constantly on the wrong end of an uneven playing field. Boeing take Airbus to the World Trade Organisation Court over UK, French and German subsidies of Airbus, but choose to ignore that their 747 Jumbo was originally intended to be a military transport plane whose huge development cost was paid for by the Pentagon. Look at Germany with Opel; France with Alstom. Yes, we have the moral high ground. Yes, in a perfect world we should all go for world-wide competitive acquisitions and ignore the "national" ingredient. But it is a sad fact of life that no-one else is playing this game. How do you explain to a woman who has worked in Bournville all her life that if Cadbury were French, German or American (and definitely Chinese or Indian) and Kraft were British this worrying situation would just not arise?

Of course the sustainable solution is to be found in shareholders who take a longer-term view of investment, (and I hope with all my heart that the Cadbury shareholders will see a greater, long-term reward in sticking with independence) and with a Government that leads (by its actions in taxation, regulation and training) a culture-change movement so that manufacturing matters in the heart of the electorate across the land. But when I see socially-inclusive wealth creation being put on the slab in a way that not one other democratically capitalist country would give airtime to, I have to wonder whether as a country we really do get it … that Manufacturing Matters!

"Too many skills, to many world-renowned brand names have been lost to our country already. Wedgwood made in China; a Saville Row suit whose cloth comes from Asia; Northampton has lost its shoemaking capability; when was the last time they built a merchant ship of any size in the UK? This lament isn't one pleading for protectionism. It is a real tribute to this country that the Japanese and the Indians want to build their cars here, that the French are keen to build some of their defence equipment in the UK, that the Americans see us as the place to build their earthmoving vehicles for Europe. But this won't continue if our manufacturing heritage is cheapened by the loss of the necessary skills, if perception takes over and people around the world don't think we make things anymore. In many areas we make just as many manufactured goods as the French or the Americans per capita, so why doesn't it feel like it? Whatever the objective strategy of restructuring into the manufacturing of tomorrow's goods, if potential investors from across the globe see world-class brands leaving us, skilled men moving out of towns or areas forever they will feel we don't care, that Government stands idly by, that the moneymen take all before them, that no-one will stand up and fight to keep an important part of what we are. Then the social good of manufacturing gets drowned out; the pride in a community takes second and when people feel others don't care they stop caring themselves too … with disastrous consequences for healthcare, education and self-respect, let alone paying our way in the world."