Poor show Rolls-Royce

Posted on 20 Jan 2010 by The Manufacturer

Six months after our national champion gets a big chunk of £151m of public money, there is little to report

Advanced Manufacturing (AM) is a £151.5m government strategy launched in late July 2009. Business Secretary Lord Mandelson said the package of measures “will help equip British manufacturers, of all sizes and sectors, to take advantage of the advanced technologies and new market opportunities now shaping our industrial future.”

Rolls-Royce received £45m directly for the construction of four new manufacturing facilities and £45m indirectly for the low carbon element of the Strategic Investment Fund, which supports R&T in low carbon aircraft engine technology. In addition Rolls-Royce is heavily involved in Samulet – Strategic Affordable Manufacturing in the UK through Leading Environmental Technologies – which received £40m from the AM fund.

In total the aeroengine maker is the beneficiary of, or a key decision-maker in the spending of, £130m from this initiative. I have no axe to grind on this point. Several people involved in manufacturing have said the Rolls-Royce portion was too big and smacks of ‘picking winners’, a policy the Government has been keen to distance itself from through the Nineties and Noughties. But Rolls-Royce’s supply chain is long and deep and many UK SME engineering firms will stand to benefit from both the new factories and Samulet.

Six months on, however, no-one at Rolls-Royce, the Department for Business Innovation and Skills (BIS) or the Technology Strategy Board can say anything of real depth about any of the large portions of this fund. Is this good enough? Malcolm Wheatley, a freelance writer, has just filed a piece for TM on the assessment of government strategy. This and my own enquiries about AM reveal – not much. Rolls-Royce says these are long term projects and the feasibility studies for factories takes time, suggesting that we come back in ‘another few months’.

In fact, BIS announced the location of the new civil nuclear factory as being in South Yorkshire in December, and Rolls-Royce confirmed that one of its factories is likely to be located at the site of the former Dunlop tyre factory in Washington, Tyne and Wear.

There is little else though. I appreciate that premature tips on new factory locations in the press might be damaging. And this is a PLC with shareholder sensitivity to consider – are investors sensitive to factory locations? – but this is also six months on. And Samulet? Nothing. What about BIS? Ask Rolls-Royce they say. How is the money involved in the Strategic Investment Fund being spent at the moment? Sorry, no.

Must do better
This is disappointing. Not as a journalist trying to put meat on my magazine’s bone (OK, that as well), but more as a taxpayer. Being granted with responsibility for £130m will seem to some like small fry compared with the £850bn estimated government support for Britain’s banks post-financial crisis, but nevertheless is there not a duty of care to keep the public informed of the progress of this spending? Perhaps Rolls-Royce and BIS think the public doesn’t care about the update of such minor projects? Suffice to say the money is safe and we will spend it wisely.

Therein lies the rub. Lord Mandelson talks about more real engineering, rather than financial engineering. Government has launched six strategies since September 2008 demonstrating its commitment to this sector. Everyone is talking about new jobs, new industry, bridging the skills gap and the opportunities for jobs and producing more engineering skills from the low carbon economy (this week the Govt approved the backing of up to 32GW capacity of offshore wind farms). And manufacturing is crying out for a more positive press, both in terms of its successes at home and internationally, and to improve its image as a career destination. If you want a better image, don’t just take the money and crawl into your shell. Tell people what you’re doing with it so they can understand the endeavours of this sector better.

So it’s simply not good enough for BIS and R-R to wave large numbers in the air and leave it for six months (and maybe a few more) before reporting back on the spending plans and their effectiveness. As stakeholders we deserve to have some information now.

I am a huge fan of Rolls-Royce. It’s one of very few British world class tier one multinational companies left – and as Kraft gobbles up Cadbury the pool is dwindling; I get a sense of pride when I hear R-R has won big contracts with Airbus and Boeing; my father was a shareholder, blah blah. Don’t mistake this as a whining hack’s personal vendetta against a company notorious for being media shy. I merely want to make the point: UK manufacturing needs a better, wider press to promote its strengths to the British public and the world; Rolls-Royce, BAE Systems et al are our national champions who should set an example to tier two firms and SMEs; and R-R was gifted up to £130m of public money but won’t / can’t tell us how it is spending it. Is this irony, or cynicism?

Is it too much to ask for a bit more accountability and transparency in how companies spend public money, particularly at time when there is less and less of it to go around?
Rolls-Royce and BIS – I would be delighted to hear from you: [email protected], 020 7401 6033.

Will Stirling