Byers, George and Brown: an unholy alliance

So it’s official, and it has a familiar ring: there is no alternative. Stephen Byers, Eddie George and Gordon Brown lined up this week to say there was nothing they could do about the strength of sterling. Sorry, we know it’s causing you a few problems, but bringing down interest rates would destabilise the economy. Manufacturers must get used to a stable economy in which sterling is worth DM3.20. Industry must compensate with productivity.

In the 1970s and early 1980s there was justification for attacking poor productivity. But two recessions since then have changed the picture.

Over the last few years The Engineer has run countless stories about companies which have transformed their profitability by introducing new working practices, adopting continuous improvement, and so on.

The SMMT Industry Forum has done sterling work in spreading best practice through the automotive supply chain – to the extent that it was commended to other industry sectors by a DTI Competitiveness White Paper two years ago. The DTI is backing the CBI Fit for the Future campaign aimed at bringing trailing companies up to the average. Do Mr Byers and Mr Brown think that manufacturers aren’t aware of the need to improve productivity?

Brown berates the fact that UK productivity is rising at only 2.5% annually compared with 3.5% among our European competitors. BCC director general Chris Humphries points out evidence that manufacturing productivity is running this year at 5%. But this is academic when sterling appreciated by 37% against the euro up to 1999 and by a further 11% last year.

Brown, Byers and George should give more thought to the break up of Rover, or the threat to Ford at Dagenham or to Corus. Perhaps they should ask why Nissan’s John Cushnaghan, in charge of the most efficient car plant in Europe, is worried about profitability.

To throw at us the problem of sterling’s strength while lecturing on improving productivity is not just an abrogation of responsibility: it is an insult.