Manufacturing sector welcomes Government's rescue plan
Labour’s much vaunted new Manufacturing Strategy – New Challenges, New Opportunities – has provoked much response. Manufacturing Correspondent Duncan Tift looks at the region’s reaction.
The Government’s intention to remedy the ills facing the manufacturing sector caused heated debate when its supposedly new repair strategy was announced on Monday.
The £150 million support package for the industry was designed to catch the headlines – and indeed it did – but in truth, there was relatively little new contained in the proposals. Indeed, ministers themselves admitted that what was being proposed was a “refreshed” approach to policies already outlined.
The pledge to deliver a new Manufacturing Technology Centre in Coventry has been welcomed but manufacturers looking for reassurances of a stable economy next year and more help to ease the growing skills shortage in the sector were disappointed.
Nevertheless, there has been widespread support for the announcement as a sector battling against the rising tide of recession, clung desperately to a vital lifeline.
Less anyone underestimate the importance of manufacturing to the region, a few facts and figures may serve to illustrate why Gordon Brown could not have chosen a better place from which to announce the strategy.
The West Midlands is home to around 19,000 manufacturing firms, which between them employ more than 360,000 people and generate sales of £45 billion.
So what did the region have to say?
Jaguar Land Rover, which despite its new owner, remains an iconic Midland manufacturing company and it hosted the Prime Minister’s visit on Monday.
The company, which is basking in the success of the Jaguar XF saloon but at the same time suffering from declining demand for its luxury off-roaders, has welcomed the strategy and urged its full implementation, claiming it is central to Britain’s future prosperity.
Chief executive David Smith said: “We believe the manufacturing sector is central to the future prosperity of the UK economy, and share the Government’s view that manufacturing’s contribution to the UK is significant and not given the recognition it deserves. We therefore welcome this initiative and look forward to its full implementation.”
“Jaguar Land Rover is striving to sustain and grow its manufacturing and R&D operations in the UK, but clearly global competition continues to intensify and we have faced considerable pressures from rising energy and commodity prices, combined with reduced consumer demand.
“We therefore support actions that underpin UK manufacturing investment and productivity during this difficult period, including the development of trade opportunities with low cost supply chains and actions to support economic growth and reduce input and financing costs,” he added.
JLR is in a strong position to dictate policy. It invests heavily in design and environmental technologies and only last year announced a £700 million investment in developing environmental technologies. Not surprisingly it fully supports development of the UK’s capability in this area.
During their visit to Castle Bromwich the Prime Minister and his ministers met with JLR’s intake of 54 apprentices, who only started their careers with the company last week.
“Manufacturing can only grow and prosper if we attract sufficient numbers of suitably skilled people into the sector,” said Mr Smith.
Elsewhere, manufacturers’ group EEF also welcomed the plan, claiming it set out a clear long term strategy for how high value industry could contribute to a modern balanced economy.
Chairman Martin Temple, said: “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. Government must take every opportunity to drive home this message.
“The next step as with all such announcements is to deliver and back the positive words with firm actions of intent and support.” However, Mr Temple added that there remains an immediate short term need to help industry and the wider economy through the current global economic turmoil.
“This is a strategy for the long term and one we applaud. However, it does not detract from the need to use policy in the short term to help companies through the current turmoil and ensure they are in a position to take advantage of the upturn,” he said. Of what was announced, EEF said it especially welcomed the positive view of how manufacturing has performed, how it is changing and what it contributes to the UK.
The organisation said it believed government must continue to reinforce this message to key stakeholders and the public at every opportunity to promote a better understanding of the opportunities available in a thriving industry.
It also welcomed the commitment to develop low carbon technologies and measures to exploit this for new business opportunities.The intention to address the image of the sector through the Manufacturing Insight Programme was also a step in the right direction, it said, as was the Manufacturing the Future campaign in schools to promote a better understanding of industry, its contribution to the economy and the careers available.
The expansion of apprenticeships by inviting bids from large manufacturers to train additional apprentices including for their supply chain, has been highlighted by the organisation, while it added that efforts to simplify the skills system were welcome although business would need to be convinced that real progress was being made.
Lord Kumar Bhattacharyya, head of Warwick Manufacturing Group, said establishing an MTC in Coventry was an important step forward for the region.
“It is a very good thing,” he noted.
“The Government has done a lot for manufacturing over the last ten years – the Manufacturing Advisory Service, research and development tax credits, Learning and Skills Councils, the emphasis on training and apprenticeships and a huge increase in the Research Council budget.”
However, he said that the nature of manufacturing was changing and it was important this was recognised.
“The manufacturing industry in the UK represents about 14 per cent of GDP, which is very similar to other developed countries, but the nature of companies is changing; you don’t get the big ones that used to exist. “Britain is now a niche manufacturer,” he added.
He also stressed that partnership development was the way forward and pointed to Tata Motors’ acquisition of Jaguar Land Rover as a prime example of this.
Chief executive of the Manufacturing Advisory Service - West Midlands, David Wright said that manufacturing was the region’s main wealth creator and its importance should be recognised. “Manufacturing remains the lifeblood of the West Midlands – based partly on its heritage and indeed as we look to the future,” he said.
The Conservatives were understandably sceptical of Labour’s plans.
Shadow Secretary for Business, Alan Duncan, said: “Manufacturing is a vitally important sector for the UK economy and, contrary to popular myth, there are many British success stories that have held up well against fierce global competition.
“However, while other countries like Germany have been successfully building whole new industries based on low carbon technologies, the UK has lost over a million manufacturing jobs since 1997, while our green energy sector remains tiny,” he added.
Mr Duncan said what manufacturers craved more than anything was economic stability, however, the Government had failed to deliver this.
Russell Luckock, chairman of Birmingham-based manufacturer AE Harris, said that until firms were offered greater control over apprentices then the skills shortage would continue to dog the industry.
“It used to take five years to train a toolmaker and then at the end of that apprenticeship you could offer the trainee a decent job. Nowadays you can train an employee but there is no guarantee they will stay with the firm afterwards – I know of many who opt to leave either part way or soon after their training is complete because they want to work in computing or something.”