Fighter kicks off for investment

As Government policies increase the squeeze on manufacturers, MTTA president Mike Legg has come out fighting for more investment in the industry. He tells Douglas Friedli how he aims to kick-start a change in the culture

Most people’s idea of the worst time to represent the UK’s machine tool industry would be halfway through a manufacturing recession. But Mike Legg has come out fighting in the first half of his term as president of the Machine Tool Technologies Association.

Legg’s first year has marked another step forward in the MTTA’s transformation into an effective lobbying organisation speaking for manufacturing industry. Last year, the association identified the mainstream media as an important battleground in making its case on issues such as the Budget and interest rates. So Legg has racked up seven television appearances. Hardly in the same league as Chris Evans – but seven more than Legg’s predecessor.

Another priority for the MTTA has been to put its case directly to government. More lobbying has followed. The MTTA’s Meeting the investment challenge report, produced with Oxford Economic Forecasting, has been impressed on ministers and officials in Whitehall. According to Legg, it has been well received.

But despite the lobbying, arguing and positive signals, government policies have made life more difficult for manufacturers. Interest rates and the strength of the pound may not be new, but they are still capable of doing damage, as pressure on Rover’s suppliers showed earlier this month. `That is a disappointment for me. Following the Green Budget and the White Paper on competitiveness, it really looked as though the Government wanted to recognise the importance of manufacturing and of small engineering firms,’ says Legg.

`We’ve had other initiatives through the course of the year, most recently Stephen Byers’ summit on manufacturing. But we’ve heard nothing since. Manufacturing did not feature on the agenda in any of the major speeches at the Labour Party conference. They say they recognise the importance of manufacturing to the UK economy, but they don’t seem to know what to do in order to support it.’

A problem for advocates of manufacturing is that they can be seen as whingers. Legg is aware of this. `I don’t think it’s fair at all,’ he says. `We have to address it by being positive and explaining to people why manufacturing is important to the whole of the economy.’

Being positive includes accepting that some battles may nowbe lost. `We’ve had our say over the past few years on interest rates and the pound. We have to find a way of living with a three Deutsch-marks to the pound exchange rate. And we must recognise that although interest rates are double what they are in Europe, they are still half what they were five years ago. We can benefit from low unemployment and low inflation. So the key issue is how to produce with high quality at a lower cost.’

Hence the emphasis on encouraging investment, particularly in machine tools. There is a case to be made for this, as capital stock per worker is around half as much in the UK as it is in Germany. For several years, the MTTA has been calling for the one-year 50% capital allowance for small companies to be changed to 100%.

`It’s very important that it should be permanent,’ says Legg. `We don’t want them to do it for just a year. All that does is bring forward last year’s orders into this. Companies need to know they will get this sort of support this year, next year and for the next 10 years.’

More recently, Legg has called for the reintroduction of the Small Engineering Firms Investment Scheme, which last ran from 1981 to 1982. This paid about 30% of the cost of new capital equipment bought by small companies, and aimed to encourage take-up of numerically controlled machining equipment.

He believes that grants of around 20% of the cost of equipment could be enough to push companies into taking long-term investment decisions. It would be a one-off, though. `We would see a SEFIS scheme as a quick response to a problem we have at the moment. In other words, it would kick-start the change to an investment culture.’

The idea that the Government would willingly hand over cash to struggling businesses might seem unlikely, but Legg points out: `Over the years, the government has spent a lot of money on inward investment. If they can do that, why on earth can’t they help our own indigenous companies at the same time?’

As well as arguing the case for industry, Legg is still managing director of machine tool importer and distributor Hitachi Seiki. `It’s been difficult, as the economic climate has been hard and it’s during those times that the business really needs closer attention. But the management here has been pretty supportive, and the parent company is delighted.’

The two jobs need similar skills. `Whether you are selling machine tools, walking a fine line between manufacturers and arguing the case for Government to support manufacturing, there is a common thread of diplomacy,’ Legg says.

Mike Legg at a glance

Age: 50

Education: University of Newcastle-upon-Tyne: BA in Economic Studies

First job: Robson Rhodes chartered accountants

Current job: managing director, Hitachi Seiki; president Machine Tools Technologies Association

Interests: Horse racing, golf