The government’s new Industrial Strategy, published in November 2017, does not lack vision or detail in its aim to transform the UK’s manufacturing sector. The real challenge will be in the delivery of such a grand plan, says Kieron Salter, managing director of KWSP.
Stretching to more than 250 pages, the long-awaited Strategy is a coherent and fully-formed vision for the future of manufacturing in the UK. Comprising five foundations of productivity (ideas, people, infrastructure, business environment and places) and four Grand Challenges (AI/data, mobility, clean growth and the aging population), the document is undoubtedly impressive. Greg Clark, secretary of state for business, energy and industry strategy, has produced a laudable plan.
My greatest fear is that innovative, fast-growing enterprises with great ideas, great people and huge potential could get lost along the way.
While the details concerning Continental trade in the wake of Brexit are understandably vague (“we are leaving the EU, but we are not leaving Europe”), the government has not swept chronic weaknesses of UK industry (most notably our poor productivity) under the carpet.
Hidden away on page 169 is an important section looking at the UK’s inherent productivity puzzle, which has dogged policy makers for decades. While our nation’s ability to create new enterprises (apparently at a rate of over 1,100 every day) is impressive, and our unemployment rates are much lower than most other European economies, productivity is remarkably low. This productivity gap is especially evident when comparing ‘frontier’ businesses (top 5% of performers) against the long tail of ‘non-frontier’ laggards.
While poor management and skills have been identified as major contributing factors to this problem, low levels of fixed asset investment (i.e. new technology and machinery) is seen as a key barrier to improved productivity. France invests around 23% of its GDP into technology; in the UK this figure is closer to 17%, according to the OECD.
The earlier Green Paper, a Scale-Up Task Force headed by Margot James MP, was established to help SMEs grow into viable larger enterprises. While the Industrial Strategy highlights four issues identified by the Task Force – data, skills, finance and marketing – this seems to lack conviction and energy as a plan, given the vital nature of the SME engineering sector that is so ripe with potential.
I’d like to see much more detail on the delivery of this aspect of the Industrial Strategy. As mentioned earlier, while not decrying the ambition and scale of the plan, as a fast-growing SME in the high performance engineering sector, it is sometimes difficult to see how businesses like KWSP, fits into the complex kaleidoscope of the strategy.
While there is an awful lot of very good thinking within the 250 plus pages, the well-known song title, ‘It’s not what you do, it’s the way that you do it’ comes to mind. With so much vision and admirable aspiration for UK manufacturing, my greatest fear is that innovative, fast-growing enterprises with great ideas, great people and huge potential could get lost along the way.
With so many high-level Minster backed groups, focusing on the five foundations of productivity or the four Great Challenges, I’m worried that those who could benefit most and contribute much will be side-lined.
It is vital that we all read the strategy and understand how we can play our part
SMEs are used to getting on with business, often without any centralised support. Typically, access to grants has been filed under ‘too much trouble’ for fast-growing enterprises who are more concerned with their next project than filling in pages of application forms. A good potential model for success lies in the foundation of like-minded cluster groups, such as the recently-established Silverstone Technology Cluster based in Motorsport Valley, Northamptonshire. Comprising mostly SMEs, this cluster demonstrates how the sharing of ideas and technologies across sectors – known as horizontal innovation – is already working well in the UK. While top-led initiatives such as the Scale-Up Task Force should be welcomed, it would be an opportunity lost if these two groups were not linked together in some way.
Granted, the scope of the UK’s brave new Industrial Strategy is impressive. Whatever part of the manufacturing sector you’re from, it is vital that we all read the strategy and understand how we can play our part. Plans are only as good as the people carrying them out. It would be a crime if industry failed to engage with this crucial vision for success.
Kieron Salter is Managing Director of high performance engineering consultancy KW Special Projects.