TM’s Naked Engineer reviews some of the ambitions, hits and misses at EEF’s debut national conference.
It was by all accounts an extraordinary day for UK manufacturing and industrial policy.
EEF’s first national manufacturing conference was a sell-out, with over 500 delegates on the day. Leader of the opposition Ed Miliband was joined by Business Secretary Vince Cable – straight from the Geneva Motor Show – and BAE Systems’ chairman Dick Olver as the ‘super keynotes’ to talk up manufacturing’s importance. And Chancellor George Osborne capped off the VIPs with a speech at EEF’s biennial manufacturing dinner, crediting EEF’s lobbying as having directly influenced policy-making in key areas like R&D tax credits. [Although no mention of capital allowances… sniff.]
And then, no sooner had Dr Cable exited stage left, to prove there is no such thing as bad publicity (for EEF at least), the BBC reported breaking news of the ‘leaked letter’. From Cable to Mssrs Cameron and Clegg, written in February, it accused the government of having “no compelling vision for where the country is heading, beyond sorting out the current fiscal mess,” saying the obsession with avoiding picking winners had “swung the UK too far in the opposite direction”.
Juicy stuff, and plenty of plugs on the Beeb for the EEF conference, but not unsurprising given Vince Cable’s devotion to policies like the One-in One-out cap on regulation and his regular dialogue with industrial big hitters like Jaguar Land Rover and Tata Steel.
Ed Miliband, delivering a polished stage performance without the protection of a lectern, basically said the same thing. He didn’t drop a word in his keenly-researched, 7-min oratory and one would think he was a senior manufacturer himself (until question time, when he appeared to have little penetrative knowledge of key subjects, instead referring back to his speech).
Mr Miliband said there is an important distinction between protectionism, which was wrong, and industrial intervention with patriotic ambition. In other words, it’s wrong to pick winners but OK to direct more manufacturing work to British industry in areas like government procurement, which he said had for too long neglected domestic suppliers at the behest of EU rules more loosely interpreted by our European friends.
The remedy: an industrial policy that supported British industry. He cited failures like Bombardier (train contract), Sheffield Forgemasters (cancelled Govt loan guarantee for unique press) and the defence white paper that favours off-the-shelf procurement.
It was hard to tell whether the reaction in the room packed with seasoned manufacturers was more one of Eureka-like revelation and anticipation for what was to come next, or a ‘collective underwhelming’ that such a lightbulb moment, while welcome enough, was about 30-years too late.
Mr Miliband focused on three solutions to the industrial growth problem: a clearer defined role for government in supporting business, assessing the impact of corporate short-termism and how to change that, and a more competitive banking system, mainly via a British Investment Bank that would provide SME lending. An explicit reference to Germany’s KfW federal bank, among other allusions to the German industrial model, was not made but the inference was as plain as a stein of Bavarian beer.
He said government needed to be more joined-up and that the STEM skills gap was business critical, pouncing on the Education Department’s myopic gaff of downgrading the Engineering Diploma from five GCSEs to one as a easy example where policies at BIS have failed to be reflected by policies at DfE.
Somehow, though, he forgot to mention that during Peter Mandelson’s industrial activism in the last months of the previous Labour government, Advanced Manufacturing Strategies popped up on the one hand while HM Treasury resolutely defied calls from industry to increase capital allowances and relax tax on R&D on the other. Joining the dots within government is not-Coalition specific.
Mr Miliband’s takeaway message was the need for judicious support for British industry, that we should be proud of ‘Made in Britain’ and that patriotism is not about protectionism. All good stuff, although some in the audience may have mulled over the detail. How, for example, we implement a more patriotic approach to government procurement contracts, when EU rules say that tendering for specific contracts must be made available to other EU members in the open market.
As one EEF member of staff said, it was a good statement to make in opposition with three years until a general election.
Cable joins calls for industrial strategy
Vince Cable also expressed his preference for an industrial strategy. This was later unfortunately exposed by the BBC in the ‘Visiongate’ letter. Judicious intervention was good and proper. Where there were recent examples of state-assistance for business, Cable identified how they had worked.
He said “If we provide meaningful support to the industries of the future, we need to be able to step in at the key development stage, such as the live demonstrator stage. This requires finding out what we’re good at.”
The first Catapult, aka the High Value Manufacturing Catapult, will receive £140m in the next six years to help companies get through the ‘Valley of Death’ en route to commercializing new ideas. He spoke of more Catapults in offshore renewables, cell therapies, satellite applications and the digital economy – and connecting the whole thing by 2016.
He said: “We need to be more explicit to get fully behind the innovative sectors – it won’t do to just respond to crises. We require a planned and proactive approach,” reminding the audience that his old industry, oil & gas, sometimes works on a 25-year project cycle.
This interventionist approach has worked for the UK automotive sector.
The car industry 20-years ago was in constant decline, characterised by strikes and poor management. The Automotive Council was established to generate stronger supply chains, provide high level skills and apprentices, make the sector more attractive for investment, and provide genuine collaboration. Now there has been a complete reverse, Cable said. The sector has 3,000 companies employing 133,000 people, from buses to niche sportscars. The Automotive Council has helped this to happen and now other sectors, like aerospace and the Marine Leaders Council, have shown the model works elsewhere
Both Miliband and Cable were on the same page, if not reading the story in the same dialect.
Their view on industrial policy has its detractors; Allister Heath of CityAM slams industrial policies as ineffective, where efforts to control invention and innovation are akin to nailing paint to the wall. Dyson, after all, didn’t need a Catapult, an Automotive Council or a Business Growth Fund. But one feels we should wait before condemning the efficacy of the Catapults in their ability to help turn sectors with great promise into wealth creation.
Plus ça change
Some of the old laments were inevitably rolled out with little belief that real change was forthcoming.
Yes, SMEs have a problem with access to finance and there is a dangerous skills gap, also the mechanism for funding new innovations at key Technology Readiness Levels is unclear and needs better explanation. The conference addressed these areas and for some, real answers were revealed such as a good overview of non-bank lending in the Alternative Finance for Investment Workshop (follow The Manufacturer’s coverage of the breakout streams soon).
Capital allowances, EEF’s age old drumbeat, show no sign of being increased and there is no cogent, consistent strategy for encouraging more globally-focused UK-based companies to expand. Capital allowances is beginning to sound like a broken record and at some point we need to change the song (ideally when govt increases them).
The especially frustrating rhetoric yesterday, however, were the words of Ed Miliband that government needs to be more joined-up. This echoes words spoken at times in similar addresses by David Cameron, Vince Cable, Peter Mandelson, Mark Prisk, Ian Lucas and other MPs past and present with a manufacturing interest. With such overwhelming consensus, the question has to be: why ISN’T it?
And why – if the UK’s power brokers are in agreement that a more strategic approach to industrial growth is necessary, where those same cognescenti have observed this need since (and perhaps before) the financial crisis – why has one not been better articulated? Instead of a string of disparate stop-start mini manufacturing strategies, a New Industry-New Jobs initiative, a Plan for Growth, TICs that become Catapults, Queen’s Engineering Prizes and defence procurement favouring off-the-shelf.
Much meritocratic tactical action, but one feels skin-deep, disparately organised and administered with little common strategic glue to bind together and focus on clear targets. Having said that one should commend initiatives such as the £125m Advanced Supply Chain strategy to help larger companies secure reliable supplies of parts from more UK companies.
EEF’s conference was a high quality, well executed event with high level speakers and delegates. You felt that, done annually or with one or two more like this in the calendar, real change could be effected.
The next step for EEF, IMechE, the Royal Academy of Engineering, the Government and other manufacturing prime movers, is to measure the status of access to finance; skills; govt intervention & funding, and Catapult successes today, and again in time for the next one. EEF Conference Mk II needs to provide a quantitative analysis of change, if it is to build on a very strong foundation in its debut year. And Mssrs Cable, Miliband et al need to report back to manufacturers on progress with their ideas of industrial policy.