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.
The Government’s Industrial Strategy white paper has concluded that the skills and capabilities of those employed in the Private Sector, including that of engineers, need upgrading if the UK is to realise its vision of a Global Britain and pay its way in the world, post-Brexit. But there is no recognition that people in the pay of the State – the other party to this Industrial Strategy, on whom its success is wholly dependent – are equally ill-equipped for their public sector roles. This lack of acknowledgment is not a surprise. The Industrial Strategy is, after all, written by people in the pay of the State!
It would also explain why there is very little confidence in the ability of big government to fix market failures, use the instrument of regulation to curb anti-competitive behaviour or secure value for money for public funds invested in infrastructure.
Indeed, the reputation of people in the pay of the State is further diminished by the fact that their ability to innovate, solve problems, learn from past mistakes and adapt to change, which is a distinctive characteristic of people in the Private Sector, has been erased in the Public Sector due to incessant conditioning of the mind from an early age.
But, what is especially worrying about people in the pay of the State is that they haven’t got a clue about what it is that drives the behaviour of for-profit organisations in the free market – not least, because they have not spent a single day of their lives in the Private Sector – and yet they have been put in charge of spending taxpayers’ money to the tune of £268 billion to buy goods, services and labour from non-public sector organisations.
Worse still, in specialised markets such as that in military equipment for the Armed Forces, the role of the regulatory authority and sponsoring agency has been combined in one department of state – the Ministry of Defence – which means that the independent scrutiny function, free from political interference, is non-existent.
So, successful capture of a department of state by the Defence Industry amounts to taking control over both roles!
Additionally, the culture in Whitehall has always put greater emphasis upon people who master rules, regulations and processes instead of valuing hard work, performance and delivery. What’s more, civil servants have migrated over the years, in overwhelming numbers, to the Private Sector via the revolving door in pursuit of a second career and infected it with these traits. Which would probably explain why the Defence Industry has failed so miserably to deliver equipment to the Armed Forces that is fit for purpose, adequately sustained in-service and constitutes value for money through-life – given that 99% of people who work in the Defence Industry were previously in the pay of the State.
Instead of doing the decent thing and educating people in the pay of the State about the ways of the Private Sector, defence contractors are busy exploiting their ignorance, for one purpose only – relieving them of taxpayers’ money – which has, in itself, left the public finances in pretty bad shape.
It’s not so much a lack of skills in Whitehall that is the problem, but a surplus of people with the wrong skills. Some people say that they can be retrained to equip them with the necessary skills which will enable them to deal with today’s challenging public service tasks. But the undeniable truth is that these people are simply beyond repair!
@JagPatel3
I greatly value Kieron and JagPatel3 comments: and not only because they do echo and compliment many of my own! Civil servants who are neither civil, nor give the State (their employer) much service: clerks paid and revered well above their proper station, who only count-up after the event (if ever) and who whether they get it right (Right?) or wrong are guaranteed payment : more clerks who fight the disputes of others, for reward and yet who rarely if ever get hurt (the ultimate mercenaries) great reward to those who sell what they did not grow or own or make : and or who promote such by advertorials, marketing, and who have insulated themselves from both market forces and the cleansing effect of capitalism: and to cap it all groupings who are there to govern, but almost constantly debase the very democracy under which we are supposed to live? The whole financed by more groups who sell money they do not own: and if and when they get it so wrong that they are headed for Carey St , have to be bailed-out because they are ‘too big to fail’ -others who sell the paper (shares) stuffed into the portfolios they have developed, often to more of the same, and yet more who insure (a bet you hope you lose?) the potential for loss…. Did I miss anything?
Deal with this, and who knows what might be possible. But even though its almost Xmas, I have not yet heard the chorus of turkeys asking for such to be brought forward.
The lack of investment in plant and machinery in the UK is quite simply due to the return on capital available to low risk property investments. The UKs capital is increasingly tied up in property which exports nothing and is valued so far beyond its actual cost as to be a serious national problem.
I agree with Mr. Salter that SMEs rarely go for funding, apart from those businesses that specialise in milking the system; they are too much hassle for most companies. So, the funding that is much needed for investment decisions goes to the wrong beneficiaries.
The incompetence and lack of accountability of our civil service is at the root of the problems as noted by messrs Patel3 and Blamey, however, curing that problem is far beyond any UK government.
Sadly there is a recent rich history of ill-educated managers that was only punctuated (recently) in the second world war – when there was much innovation and invention.
I would like to take a different viewpoint and say that, in the past, there was an appreciation that high risks went with great opportunities – but that entrepreneurs looked to people who could manage those risks or rather engineer them (this should not be confused with the failure analysis view of risks and their avoidance.).
And, instead of a “business plan” they were looking at the management/engineering plan to reduce or eliminate risks – and to ensure profits; in software engineering this might be a structured walk-through – so that ideas and the specification are good and well-posed at the earliest opportunity; in manufacturing it could be that each (manufacturing) process was viable and available – or that they could be made so.
I suspect that the centralised support is not necessarily the sort that helps (convinces) SMEs to collaborate and be innovative. And I would posit that the sort of support required is to enable networking and conception of new enterprises; this requires a new breed of financier who is an enabler and nurtures ideas , more parent than vulture capitalist.
And a last word(s). History shows that it can be done…