Prime perspective

Posted on 17 Oct 2013 by The Manufacturer

Sir Roger Bone, president of Boeing UK speaks to The Manufacturer about the sector prime’s relationship with its UK supply chain and the importance of export maturity to competitiveness.

Sir Roger Bone, president, Boeing UK

This interview was conducted following Sir Roger’s presentation to delegates at Export Connect 2013, an Accelerated Growth Conference.

TM: Explain Boeing’s relationship with the UK aerospace supply chain. Does it matter you that your suppliers are export savvy?

Our dependence on the UK supply chain is immense. We have links with over 250 companies in the UK and last year we spent $1.2bn on that supply chain.

So for us it is vital that those companies remain healthy and innovative in everything they do. Because it is not low cost parts that brings us here. To retain its work with Boeing, the UK supply chain must remain competitive in high-end technology.

It is also important that companies seeking to play a part in our supply chain are internationally mature – that they understand the dynamics of global business.

We expect smaller companies that approach us, or other companies in our supply chain, to have done their homework. They must be very clear about the niche that they have to offer. They must have a story to tell and have some idea about how they will help us conduct our business better than we have in the past.

If we are convinced by their story, we may then tell them to go and work with ‘X’ in our supply chain – not with us directly. Smaller firms should never be shy of going to the global ‘big boy’ even if the end result is a better relationship with another company in the wider supply chain.

Like most other big companies, Boeing has a clear mechanism for making this happen. Our process is called the International Strategic Partnership Programme.

TM: How does UK manufacturing sit with Boeing’s global production and market strategy?

Boeing does not have any manufacturing itself in the UK – perhaps that will change in the future, but that is speculation.

Instead we rely on selected partners in the UK to help us put together manufactures elsewhere. So we must judge whether a partner here has a valuable contribution to make to the end product.

Over the last decade we have pushed more responsibility down into the supply chain than we ever have in the past. So that partnership between our global supply chain and ourselves as the prime has become more sensitive than ever.

TM: You mentioned in you presentation at Export Connect 2013 that the Asia-Pacific region represents an important growing customer base for Boeing. It is also a region with and increasingly confident aerospace manufacturing sector. Is this a threat to the UK’s business with Boeing?

It means that UK manufacturers must be sensitive to global competition. Boeing now has much more choice about where it goes for the products that are important to us. The UK supply chain will have to work hard to sustain the competitive edge that has brought us here.

It starts on a good basis. We have enormous respect for the UK supply base. We know that UK aerospace manufacturers hold around seventeen per cent of world trade in aerospace products and that is not something which has happened by accident. It is because of the enormous concentration of expertise and experience here.

But it will undoubtedly be tough for the UK to maintain that degree of dominance. In principle there is no reason why it shouldn’t – but it will take constant investment in R&D and the human skills base.

TM: The Bribery Act has recently hit headlines as being a hindrance to growth of UK exports. Do you have some words of advice for companies on how to approach compliance?

It’s an important consideration in international business. But there are several things that are not particularly difficult to do with regards to the Bribery Act that even small companies can accomplish.

It is very important for instance that company leadership takes a strong and consistent stance that the only way to be successful, whether collectively as a business or as individuals, is to adhere to strong ethical business practice.

Every business must also think carefully about its own particular vulnerabilities with regards to the Act. Good financial control will also help compliance.

There has been a lot of good guidance published by the Ministry of Justice which small companies should familiarise themselves with.

The Ministry of Justice has also made clear that companies should expend an amount of effort which is proportional to its size in adhering to the rules of the Act. It is not expecting small firms destroy their business model.

TM: You have expressed concerns on other occasions about the suitability of the UK’s secondary and higher education system for developing the volume and quality of engineers needed to maintain industrial competitiveness. Do you have any specific observations on the success of the UK education system in developing individuals who are enabled to work in global marketplaces and who aspire to international careers?

If you go back a century the UK was producing reams of people with huge international ambitions. They wanted to go abroad and become rich. It was part of the drive behind, and a consequence of, the industrial revolution.

One country I know particularly well is Brazil. If you look at its infrastructure, much of it is unmistakably British because at the turn of the nineteenth century it was British firms that built the railways and the mines there.

We’ve come a long way since that time and somehow we have lost that instinctive ‘zip’ to get out there and to establish business overseas.

I suspect that one of the problems is that in difficult markets – which Brazil certainly is – it takes several years to become established. This means the last thing you need is an annual general meeting in which shareholders are breathing down your neck and asking where the profits are coming from.

This means that often it is big private companies that are best equipped to chase opportunity in difficult markets – look at the success that JCB has had in Brazil in recent years.

TM: You were the British Ambassador to Brazil between 1999 and 2004 and Ambassador to Sweden before that – how well do the embassies support the growth of British business overseas?

That is a prime function of the embassies. When I was appointed ambassador to Brazil Robin Cook, who was Foreign Secretary at the time, took me to one side and told me clearly that he would measure my success on what British business told him about how helpful I was to them in advancing their interests in the country.

The work of UKTI today to support the growth of exports is not new. It has been a core purpose of the diplomatic service for the past 20-30 years to develop commercial diplomacy. I think we do it better now than we did 30 years ago however.

People are better trained and equipped to support commercial diplomacy today and one of the best developments has been an increase in local employment overseas in embassies and missions – rather than sending people from the UK. Because when someone approaches an embassy with a view to developing their business in that country, what they really want is someone who understands the local market for a particular product or business model.

We need some UK diplomats, but generally the more local employees you have the better and I do feel, through anecdote and observation that the services of the UKTI and the British embassies abroad are improving all the time. I hear strong praise in many quarters.