Big, iconic and privately owned, digger manufacturer JCB has a unique position in British industry. The government wants more companies like it, so JCB’s owner and chairman Sir Anthony Bamford advised to learn from the Germans, bring back the Techs and get on your bike.
“Have you got your iPhone 5 yet?” asks Sir Anthony Bamford DL chairman and owner of JCB, adjusting his tie for the photo. “I’ve just been given one by Jony Ive.”
‘Jony’ or Jonathan Ive, Apple’s British chief designer and personal friend of my interviewee, will receive many endorsements but he would relish this one. “Are you a technofile?” I ask. “Not in the least. I’m petrified, scared stiff.” A touch ironic, perhaps, given that JCB’s products have won several awards for design and technology.
“Germany has a trade balance – when was the last time Britain had a positive balance of payments. The early-80s? That is ridiculous. This matters to the Germans”
We are in the plush office of Britain’s preeminent industrialist on the third floor of JCB World Headquarters in Rocester. The view through the floor-to-ceiling glass is stunning; the Staffordshire fields fall away in a rural vista that reminds you of JCB’s simple roots, born in a farm shed in nearby Uttoxeter in the 1940s.
Bamfords was then a well-established agricultural engineering business. Joseph Bamford, Sir Anthony’s late father, engineered an early backhoe loading device to an old tractor. His family stuck to simple farming engines which had a proven market, while Joe decided to go it alone, founding JCB on the day his son Anthony was born. Son succeeded father as chairman in 1975, and both man and company turned 67 in October.
Such humble beginnings are a far cry from the global empire it is today. JCB is now the third biggest manufacturer by volume of earthmoving machinery in the world, after Caterpillar and Komatsu. It has 22 factories, 11 of which are abroad. It is the number one brand of construction equipment in India, Sir Anthony’s personal strategy that began in 1978 with his first factory. “In India, we are regarded as an Indian company,” he says.
A BIC strategy
JCB’s strategy is to have a manufacturing footprint in countries with the biggest demand which border other growth markets. The decision is driven mainly by tariffs. “You really need to “be American” to sell a mundane product – a piece of construction machinery – in America,” says the boss, intensely relaxed and perhaps a little tired. “In India tariff barriers are the reason we are there, in China that is definitely so. We are not outsourcing, as some other companies might, in India we manufacture products sold in Africa, Chinese products are sold in Indonesia.”
In late September JCB opened its latest factory, a $100m facility in Sorocaba near São Paulo with parts supplied by JCB plants in the UK. Prime Minister David Cameron, who opened the plant, said that it would secure British jobs rather than displace them thanks to a 1,000 machine order from the Brazilian government which equates £100m worth of of work for the UK. The Sorocaba plant will supply the the booming Mercusor region and support a construction renaissance in Brazil, spurred by the 2012 World Cup and the 2016 Olympics.
But, “That’s an impetus, not the rationale,” says Sir Anthony. “This is long term; here is a market of a few hundred million people that is expanding. Brazil has had about 17 years of growth with either left wing or right wing governments, and a common financial policy.”
Sorocaba was followed in October by the announcement of a £62m investment in Jaipur, India. Sir Anthony got into India early, beginning operations there in 1978, three years after taking the helm of JCB aged just 30. Jaipur will be the company’s fourth factory in India. “It was a love affair with India since the 1960s when it was a very basic place – tourism didn’t exist, hotels hardly existed, communications were terrible, one airline covered the country. If a minister boarded the plane you were booted off,” he reminisces.
“When we started in India we made 50 machines. No-one could have foretold the growth. It would be nice to say it was clever of me to spot what was happening there – I didn’t. The population is growing quicker than China. At this moment the economy is in a lull but still growing at 5%.”
Sir Anthony says that JCB is well positioned to access new markets from “major centres” and singles out Vietnam as a growth market accessible by JCB’s operations in Shanghai, China.
Sir Anthony Bamford’s direct influence on British manufacturing is arguably unmatched.
JCB employs over 10,000 people worldwide, 6,000 in the UK – more than any other privately owned manufacturer in Britain. He is not answerable to shareholders nor, one assumes, to banks – only his finance director. And after a very tough recession, sales grew 40% in 2011 and topped £2.75bn this year. When demand allows, he can build a factory where he likes in the world and create jobs. He is an ambassador for UK Trade and Investment, has a keen interest in politics (donating funds to the Conservative Party) and when he speaks on business policy, people listen.
“There is no point having 29,000 students doing hairdressing or beauty therapy in higher education, when there are fewer than 4,000 jobs available in this field”
Prime Minister David Cameron invited him to share his views on how manufacturing in the UK can grow. In Sir Anthony’s ensuing report, published in February this year, he pulled no punches, criticising the UK’s policy-making education and banking systems as being disconnected from the needs of industry.
The man behind the machines
Sir Anthony Bamford is married to Carole Bamford (Lady Bamford OBE) and has three children and four grandchildren. He is a devoted family man. Famously wealthy and very private, he lists fairly mundane activities of gardening and farming among his interests. Perhaps his most public weakness is his love of cars. Sir Anthony is an avid collector of classic cars and has a fondness for Ferraris. A life-long lover of racing, he still enters his Ferrari GTO, one of the world’s most expensive sports cars, into rallies but doesn’t race the cars these days.
In his report, Sir Anthony says the UK should “look towards Germany and follow their approach”. He calls for a greater commitment in the UK to make manufacturing a more central part of the economy and the report’s 10-point plan calls for systemic change in areas like education and banking to provide more deliberate, strategic support for companies that make things.
The report is unashamedly pro-Germany, embracing more family-owned companies, more banks and therefore more competitive finance, devolved power from central government to the regions, and schools that work in concert with companies.
“We can learn from them [Germany],” he says. “Germany has the highest net balance of payments in Europe, perhaps in the world. There are over 1,900 credit institutions in Germany, like the Sparkassen – in a little town like Uttoxeter there would be two or three. They don’t only provide mortgages but actually help businesses.”
He opens up. “There is almost an arrogance that we can’t learn from them. We can, they’re only next door. There has been a common [industrial] policy since the 1950s – Mittelstand helps Mittelstand. The unions are strong but they understand the importance of exports and work with companies. Even the town mayor is heavily involved with local manufacturers.”
He also cites the number of people qualified in engineering and doing engineering training in college as another measure where Germany wins.
“[My report] shows how Germany performs against us. Germans are not Japanese, Germans are Europeans like us, they had a strong currency until they got embroiled in the euro, they have a trade balance – when was the last time Britain had a positive balance of payments. The early-80s? That is ridiculous. But this matters to the Germans.”
“George Osborne wants to get to £1 trillion in UK exports by 2020. It’s fine to say that but you have to do the brick-building. British companies should get on their bikes”
Sir Anthony has also pushed for the appointment of a manufacturing champion in government, tasked with building the manufacturing base, in the mould of the job done by Lord Green for UKTI.
Is there any progress from Westminster on the pillars of your report? “[On education] It’s a good start, but it would help enormously to have cross-party agreement on 10 things that are important for manufacturing,” he says. “This goes far beyond Vince Cable’s five pillars in his strategy.”
But is there cross-party synergy on these points, could the UK really close the trade deficit?
“Definitely, but only if there is a plan with more meat. George Osborne wants to get to £1 trillion in UK exports by 2020.
That’s fine to say but you have to do the brick building. Someone asked me if British companies should go to Brazil. British companies should get around the world. They should get on their bikes, see if there is a market for what they’re making and get out and sell it.”
Sir Anthony declines the suggestion that he and JCB could play a role here, driving a quasi- UKTI trade mission programme for ambitious SMEs. “There are enough organisations. Frankly I’ve got enough on my plate with our own business. But we are a good example, if anyone wants to come and see us and our people about manufacturing, exports and export finance, we are very open.”
Educating engineers – The JCB Academy
The young Anthony Bamford completed an engineering apprenticeship in France and is passionate about the merits of the profession. “Engineers can be anything; atomic engineers, hydraulic engineers, hydro engineers – it’s such a broad church,” he says. “The great thing about engineering is you can practise it anywhere in the world. It is more versatile than architecture or medicine – an engineer is an international commodity.”
Frustrated by shortcomings in the education system, in the early 2000s Sir Anthony decided to create a new school, an engineering academy. The school for 14- 18 year olds would follow the GCSE and ‘A’ Level national curriculum, but place a greater emphasis on engineering and science disciplines. He marshaled a group of companies in the greater Midlands region including Bentley, Bombardier, Toyota, Rolls-Royce and National Grid, got the principal funding from the Department for Education and local council and covered the balance.
This September, 99% of Year 11 students at the JCB Academy received GCSE grades A* to C. The national average for these grades is 68.4%. “It has fulfilled more than I imagined,” says the modest chairman, quick to divert credit from himself to the Academy’s industrial partners. “We have proven that the Academy model works. It is done under the wings of the Department for Education so there is nothing mysterious about it,” he says, to quell any fears that the system is challenging the curriculum.
“But everything the pupils do has an engineering bent to it and that’s my interest. We are not educating people at the Academy to join JCB, we are educating them to be engineers and go on to higher education – either university or into management or higher apprenticeships. Some are coming to us but also to our partners such as Rolls-Royce.”
Why did it get to the point where you had to personally intervene in the education system? “[Ex-prime minister] Tony Blair at the time, for the reasons he thought were right, thought that more people needed to go to university. The target was 50%. When I was young it was more like 20%-25%. There is no point having 29,000 students doing hairdressing in higher education when there are fewer than 4,000 jobs available in this field. There are lots of imbalances like that.”
Sir Anthony would like to see the UK return to the technical colleges (Techs) that were abandoned in the great university reform. “Derby was one of the best Techs for engineering,” he says. “They have TV ads now that don’t even mention engineering. We have become debased. It started with Tony Blair’s idea, but then Lord Adonis (former education secretary) realised it wasn’t helping education, and became keen on academies.
The problem, as often the case, is political. “Local authorities are where education is invested in, but politicians of all stripes don’t like the power of local authorities,” he adds. “The Department for Education would like to divest that power so that schools would report direct to them. Even the curriculum is determined in some cases by the county councils. It should be centrally governed.”
Many in industry would like to see this man assume the job of a manufacturing tsar, with a peerage to facilitate this. With a global company to run and emerging markets to help construct that seems unlikely, which is a great pity given his huge achievements and conviction for real change.