Two Leadership Debates down, one to go … and lots of talk and promises about jobs and growth, but not a word, not one syllable, about how we are going to trade our way out of this mess, how we are going to earn our living as a Nation. Three Leaders, talking about Public Spending, cutting it, delaying cutting it, ring fencing it, even increasing it! But not a word about earning the stuff first! It is down to Business to generate the wealth to pay the tax, or employ the people who will pay the tax, upon which the public sector and public spending depends.
This week’s GDP figures shows a fragile recovery at best, with a resurgent Financial Services Sector interestingly to the fore. Nothing wrong with that. Indeed we badly need our financial services sector and giving it a political kicking might help standing in the polls (Mr Clegg even called them “wretched Banks” in last Thursday’s Debate) but we would be the poorer in so many ways without them. After all, they may only be some 8% of GDP, but our Banks, Insurance companies, lawyers and accountants are your genuine value-added tax generator, delivering up some 22% of all Business Tax in the Country.
But we must rebalance our economy! Never again must we be so dependent on one sector that when it goes bust, it takes us into a deeper and longer-lasting recession than any of our competitor Nations. Rebalancing will call for support for our Tourism Industry, our Creative Industries, our Higher Education capability; all these are world-class and big employers and wealth generators. But the elephant in the room, the one sector capable of bringing in the dosh from overseas, equipped to fly the flag around the World and earn our living is the one that not one political Leader has mentioned to date: Manufacturing.
“We don’t make things anymore” is a cry that I hear so often, often from people who should know better. We are the sixth biggest manufacturer on earth, we have restructured our industrial base in a way that has eluded the protectionist-fuelled businesses of America or France. Half of every Airbus that takes to the skies is made in the UK. The wings, the undercarriages, some of the avionics and. of course, under the wings, the greatest and best engines in the World, Rolls-Royce made in Derby. Tell the most productive car plant in Europe (no it’s not in Germany or Poland) and the 2nd most productive in the World – Nissan’s plant in Sunderland – that we don’t make things anymore.
Kraft shelled out a fortune for a class act, THE chocolate manufacturer, Cadbury, doing it in Bournville in the heart of the Country. The 2nd largest pharmaceutical manufacturer on Earth is British; Glaxo Smithkline do it here in the UK. Our Defence Manufacturing capability is globally successful, massively important to our Country and employs hundreds of thousands of people earning billions for the UK. “We don’t make things anymore”? Wrong!
But to listen to the radio silence that has been maintained by the Leaders you would have thought they too believe we don’t. And the conduct of this Labour Government over the past 13 years (and, it has to be said, its Tory predecessor) has effectively ignored manufacturing.
The sector has special requirements when it comes to investing in kit. But where has the help been over decades for small manufacturers to invest in plant? “State Aid contravenes EU rules” scream officials. So France and Germany worry about that do they?
The sector’s lifeblood is a flow of skilled young people, but with disgraceful levels of adult illiteracy and innumeracy after the taxpayer has forked out for 11 years of full-time, compulsory, free education the sector immediately experiences adverse impacts on productivity by having to teach applicants to read before it can train them in the job.
When manufacturers across Europe were having to lay off skilled workers in the depths of recession, the Governments of France, Germany, Holland and Belgium all invested in their countries’ skills base by helping manufacturers retain their workforce on short time so that when the upturn came there was a ready, fit-for-purpose reservoir of talent geared up to make things to sell around the world. And us? Not a penny! Fine talk about caring and understanding (the tea and sympathy of Government spin) but a Government still traumatised by decades of subsidising British Leyland refused to “bail out” fabulous world-class businesses. “Bail out”? JCB? Jaguar? Land Rover? Nissan? It would be insulting if it wasn’t so ignorant about modern manufacturing.
Look at JCB where I serve on the Advisory Board. They have choice where they manufacture and create wealth and jobs. Not just the Indias and Chinas of a lower cost base but Germany, hardly the Vietnam of low-cost manufacturing! So while Lord Mandelson watched skilled welders in the East Midlands leave manufacturing (forever) and become binmen in Derby, men with the same skills in Germany were retained in their jobs (on less pay but with help from the taxpayer) so that now the upturn has arrived JCB Germany is ready, willing and able to deliver.
What our political class doesn’t seem to get is that the globalisation they witter on about everyday is, in manufacturing, a harsh reality. “Get real, Nick” said the Prime Minister to one of his challengers the other night. It was about Trident, but it may as well have been addressed to all three of them about the competitive field in which our exporters operate every day. Our politicians can cry foul about the protectionist behaviour of some countries, they can tell our manufacturers that subsidies to our Banks are a special case, they can talk til they are green in the face about our climate change credentials, but if we are to rebalance our economy then manufacturing must matter more in what politicians do rather than what they just talk about. It is also vital that the media mood-music changes about making things. Objective, informed journalism is fine; ill-informed jingoism is damaging at a time when we want the young to come into the Sector.
And UK manufacturing is ready to deliver. The CBI Quarterly Trends Survey last Thursday reported rising orders on the back of a weak pound and a recovering global economy. Domestic demand is improving as well. Sentiment is more optimistic than for years. But …
Is this all too late? I am Chairman of Triumph Motorcycles, making nearly 50,000 bikes a year in Hinckley in Leicestershire. (“We don’t make things anymore”? Tell that to the great men and women at our facility who have stuck with it through these dark days and now see their products sell in some seventy countries) But we source our components from 32 countries, in part because we just can’t find tier-two and tier-three suppliers in sufficient volume and of the right quality at home.
And it is in these two aspects of our manufacturing base that the greatest worry lies.
Firstly, we do really well at the top end. The emblematic, quality, branded manufacturers employing our people, exporting around the world, earning profits and paying tax here in the UK. Brand Britain sells globally. I don’t care where the Headquarters of many of these firms are so long as they do it here! But will they keep doing it here? Global manufacturers have choice and a Government that sends out a message that their global employees aren’t welcome here with a non-dom tax, that has lost its reputation for having a competitively- based tax regime, that goldplates with misguided pride every regulation coming out of the Sales Prevention Team in Brussels and that has failed to address the skills base of the Nation really isn’t (by its actions not its fine words) putting up the “Welcome Manufacturers of the World” signs at Heathrow!
Secondly, the Country has lost the critical mass of small manufacturers that creates thousands of jobs, makes profits and generates taxation in Germany, France and the USA. Our OEMs (Original Equipment Manufacturers) would love to source as much as possible locally. Just ask Toyota or JCB or GKN. But decades of Governmental neglect, of ignorance of what 21st century manufacturing entails, of denuding the skills base and of politicians paying fiscal, political and regulatory homage at the feet of the financial services sector has skewed our economy to the point where “we don’t make things – in volume by small businesses – anymore”.
Modern manufacturing (be it in the areas of green technology or rarified science, let alone the more well-known areas) will never again employ the sheer levels of numbers of people that making the old commodity stuff used to do. The only way to achieve the rebalancing we need is to provide skilled people into a well-invested manufacturing base that is helped in its investing in kit and in its exporting around the world. All our competitor nations do it. The sector stands ready to do its bit at this time of crisis. Does manufacturing matter? You bet your kids’ futures it does. Actions not words please Gentlemen! Yes Gordon, David and Nick … That means You … Get Real indeed!