Weathering the storm

British industry has lost a million jobs in a decade, but may still have a rosy future.

The UK government's much-trailed strategy to boost British manufacturing, unveiled last month, has little in it that is brand new. However, even if it includes various initiatives that are already at different stages of development, organisations from across industry have welcomed the move.

The strategy is described by the government's department for business and enterprise, BERR, as a "bringing together" of a range of activities to create a "new framework". This programme will cost £150m, although it isn't clear how this sum breaks down or how much of it is genuinely new money.

But the overall framework is certainly not short on ambition, particularly as BERR describes it as an action plan for the medium term, up to 2011. Business Secretary John Hutton says the current challenge facing British industry is to build on its strengths to meet the pressures of globalisation.

"We are the world's sixth-largest manufacturer," he points out. "The industry accounts for over half our exports, contributes £150bn to the economy and around three million jobs.

"But we need to recognise that the global landscape is changing so we can help UK manufacturers stay ahead of the game."

One of the key issues for UK companies is the growth of complex "global value chains", according to BERR's strategy document, 'Manufacturing: New Challenges, New Opportunites'.

"What is new about the current phase of globalisation is the increasingly global location of the production of intermediate goods such as components and parts production," the document says, adding: "Success in global value chains is based on specialisation, which often involves the early application of research and technology."

BERR's convoluted analysis seems to boil down to an espousal of some well-documented trends surrounding modern global manufacturing. These trends suggest that, if you can't compete with low-cost regions such as Asia to mass produce goods, then you should consider specialising in the production of 'niche' items, especially high-value ones. 'High-value manufacturing' is the new buzz phrase, and this is really about developing products and owning intellectual property that will deliver global markets to you.

But where do small and medium-sized enterprises (SMEs) fit into this analysis? Well, another hot word is 'clustering', and the BERR document advises such firms to look to forming geographical clusters in regions of the UK, alongside suppliers and universities, so that together they can form a critical mass to attract investors and access the lastest ideas and technology.

Cluster award

One such cluster of chemicals and plastics companies has formed in north west England and Teesside in recent years, helped by £50m of funding from BERR. To promote this approach across the UK, BERR is to establish a new 'Cluster Mark' award to recognise and encourage more such groupings.

Whether such an award will have much impact remains to be seen. A greater challenge for smaller firms will be reaching out to developing countries such as China and India and establishing effective supply chains for these major markets.

Perhaps the more relevant issue around 'clustering' in a global world is having the ability to establish clusters of flexible production, assembly and supply networks within key parts of the globe to meet rising demand there.

BERR recognises this problem to some extent with a pledge in the document to give extra cash - it doesn't say how much - to support 600 companies of various sizes to explore opportunities in India and China.

This initiative adds to the valuable work that the government has been doing, via regional development agencies, to encourage local firms to try to win new export markets overseas.

The document adds that BERR will invest an extra £24m in the work of the government's Technology Strategy Board, which supports companies engaged in high-value manufacturing and research-and-development projects across the country.

There will be a further investment in the local 'Knowledge Transfer Networks' that seek to encourage local clusters of companies, academics and organisations
to work together on developing new technologies. Examples of such groupings are the Advanced Manufacturing Park in Yorkshire and the Advanced Forming Research Centre near Glasgow.

Of the apparently new money on offer, some £30m is being earmarked for a further regional specialist grouping, under the title of the'Manufacturing Technology Centre', which will be located at Coventry in the west midlands.

The centre will focus on "high-integrity joining and fabrication, expertise in tooling, automation and operational performance, with industrial scale pre-production and demonstration facilities", says BERR, which calls on local industries to come forward with proposals for more specialised regional networks.

Carbon future

Where BERR's manufacturing revival plan seems to move into pie-in-the-sky territory is when it seizes on Prime Minister Gordon Brown's vision for a "low-carbon economy". Brown said in June this year that: "By 2050 the overall added value of the low-carbon energy sector be as high as $3tr per year worldwide."

The development of low-carbon energy infrastructure, such as nuclear power stations and wind turbines, will certainly offer business and technology opportunities for UK companies, as will carbon-capture technology and low-emission vehicles. But these developments are long-term, uncertain and to some extent at the behest of big multinational corporations. To speculate that much of this new business will fall to UK-based manufacturers seems far-fetched.

All of this may go to explain why the government is deferring putting flesh on the bones of this ambitious aim until next year. The document says BERR will conduct a consultation exercise on the proposed 'low-carbon industrial strategy' with a view to producting a long-term policy framework.

Meanwhile, BERR plans to build on the work of the existing 'Automative Innovation and Growth Team', an industry-led body that has been looking at the future of the vehicle-manufacturing sector and will produce a report on low-emissions technology next year.

The government will also back what BERR describes as a "major new pilot programme for electric cars". This project will "explore the role of electric cars in a sustainable transport system in a real-world demonstration".

These aims are, again, laudable but also nebulous. A more concrete plan in the document aims to raise skill levels and attract more youngsters to manufacturing: a further 1,500 apprenticeship places will be provided in addition to 9,000 new places planned for the next three years.

A National Apprenticeships Service will also be created to coordinate existing apprenticeship programmes.

In order to encourage more young people in the UK to go into engineering and manufacturing professions, the government is taking forward a proposal, mooted a few years ago, for a national body to promote the image of manufacturing.

The original idea had been for a Manufacturing Media Centre that would aim to counteract the dour image of the sector and the gloom-and-doom coverage it constantly receives in the media.

BERR has updated the name of this body to 'Manufacturing Insight'. This body, says BERR, "will develop the evidence base and communication strategy to improve the perception of manufacturing, liaise with the media, and work to improve careers guidance [in schools]." As part of this new marketing push, a 'Manufacturing the Future' campaign in schools will promote the sector to young people.

Industry's response to BERR's strategy seems to be summed up in the verdict of Martin Temple, chairman of the engineering employers' group the EEF, who says that he welcomes the government's approach: "The strategy sets out a positive and clear understanding of how manufacturing has restructured itself and the role that it can play as a high-value contributor to a balanced economy.

"The next step, as with all such announcements, is to deliver and back the positive words with firm actions of intent and support."

Over to you, Mr Hutton.

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