Manufacturing has a key role to play in the region’s recovery but we shouldn’t get “doe-eyed” about its potential to return to the glory days of the last century, according to the head of the CBI.
John Cridland, who took over the role of director general in February after a decade as number two, said the sector was currently benefiting from favourable economic conditions but felt that many companies needed to work much harder to fully capitalise on growth opportunities.
“We have got to be realistic about expectations we have,” he said. “Manufacturing is currently 12.5 per cent of the economy – about an eighth – and it is not going to become the manufacturing sector of 20th century.
“We have to accept it is not going to replace the service sector. We have an 80 per cent service sector economy and we will remain a service sector economy, but manufacturing should be playing a bigger part proportionately and I think there are signs it is and that growth will be – without turning our back on places like Germany and the US – largely from emerging economies where there is double digit growth.”
He said there were always risks of overheating, but added: “If we play our cards right, we can have a significant proportion of that growth.
“We are underweighted but there are two sides of the coin – if we had the market share then it is difficult to see how we hoover up growth, but the fact is we are not big players in these areas and that is the opportunity.”
Mr Cridland said he spent some time with Jaguar Land Rover during his visit to the city for the CBI’s summer banquet at the Botanical Gardens and heaped praise on what they were doing as a business and its importance to the economy.
But he said not enough companies were following suit and getting their names known in emerging markets, particularly the smaller medium sized companies.
“When I speak to the ambassador in Hanoi or Mexico City, too many companies are not on their radar. So I do think it is reasonable to think manufacturing has a bigger role in economy as long was we’re not doe-eyed about it,” he said.
Mr Cridland’s appointment to the top job at the CBI followed the departure of former Financial Times editor Richard Lambert, who left with a parting shot at the coalition’s economic policies and whether they were stimulating or stifling growth. However, almost six months down the road and Mr Cridland feels that there are reasons to be optimistic even if they are not immediately obvious.
“I think Plan A is working and don’t see a need to move on from Plan A,” he said. “For me the credit crunch was hugely unexpected but the evidence is that you only recover from a credit crunch slowly and painfully.
“Do people here in Birmingham feel that recovery when actually we are 18 months into it? You see the recovery in national markets where we are hoovering up growth after a 20 per cent depreciation in our currency, but not seeing it with the empty shop front on the high street.”
Not that Mr Cridland was necessarily disagreeing with his predecessor’s assertions, just that the evidence had potentially changed during his six months at the helm.
