Ready reckoner for the industry

The mutual distrust, not to say enmity, that exists between engineers and accountants is well documented. So it is odd that the man who will be president of the Machine Tool Technologies Association (MTTA) for the next two years is… an accountant. Mike Legg, managing director of Hitachi-Seiki UK, laughs off the stereotypes. In fact, […]

The mutual distrust, not to say enmity, that exists between engineers and accountants is well documented. So it is odd that the man who will be president of the Machine Tool Technologies Association (MTTA) for the next two years is… an accountant.

Mike Legg, managing director of Hitachi-Seiki UK, laughs off the stereotypes. In fact, he looks set to be an effective advocate of manufacturing and industry concerns.

The MTTA’s remarkable transformation in the past 10 years from just another trade association to a respected lobbying organisation is something Legg hopes to build on. Part of its medium-term strategy is to become an even more effective voice in Whitehall.

‘Lobbying is of paramount importance,’ says Legg. ‘The DTI and the Treasury listen to us. Our strength in representing manufacturers and importers is very important. We don’t put forward a vested interest but the cause of manufacturing as a whole and the importance of investment to improve competitiveness. In particular, we’ve adopted the cause of smaller companies.’

Whitehall, says Legg, sees the association as ‘a barometer for manufacturing’. He is convinced that MTTA lobbying influenced the Chancellor’s decision to change the tax regime last year to allow firms to offset 50% of capital investment against tax in the first year.

On the macro side, Legg offers a trenchant critique of Government policy, something industry minister Lord Simon was left in no doubt of at the president’s inaugural lunch two weeks ago, which he used to attack Labour’s approach. ‘We’re trying to draw the Government’s attention to the results of their policies,’ Legg says. ‘They have chosen not to take notice until they see signs like redundancies and companies closing down.’

The flaw is one of timing, he says. Initially, companies absorbed the costs of the strong pound and had contracts to fulfil. So exports held up. ‘It’s only now that you’re seeing a rapid decline in exports,’ he says. ‘Now interest rates are going down it’s not suddenly going to change. It will take time to get contracts back.’

Even if the sterling problem is short-term, as the Government claims, ‘decisions to reduce output, layoffs and plant closures are medium or long-term decisions, not easily reversed’, says Legg.

‘The Government has said it does not want a boom/bust scenario. I believe they’ve failed, by only concentrating on holding down inflation. Companies also need stable employment, stable interest rates and a stable exchange rate.’

The association is drawing on the expertise of academics and professional economists to strengthen its long-term argument about the level of UK investment and competitiveness.

‘Manufacturing’s contribution to wealth creation is grossly underestimated relative to the service professions,’ argues Legg. ‘I do not believe that the service industries can thrive without a healthy, wealth-creating manufacturing base.

‘When times are tough it’s even more important to invest to take costs out. We don’t have an investment culture. We don’t invest during a recession, as they do in Germany. But the manufacturing base feels exposed. If the Government is not prepared to support it, if it’s prepared to sacrifice it, then it’s a foolish man who invests his own money.’

This applies particularly to small firms funded by their owners, or by short-term loans and overdrafts at rates far above the high base rates set by the Bank of England.

Confidence has evaporated, says Legg, and industry needs a signal from the Government that ‘we value your contribution to the economy, we want you to invest’.

The sort of signals he has in mind are ‘increased capital allowances for the long term, proper use of the small firms loan guarantee scheme, and the introduction of an investment bank or support for banks to lend long-term money to invest in technology. The most important thing is not a short-term fix, like enhanced capital allowances for another 12 months, but a long-term strategy to support manufacturing and encourage investment,’ he says.

The economy is not the only thing on Legg’s agenda. Equally important is raising the perception and status of engineers, and encouraging pupils to see it as a worthwhile career.

Legg’s enthusiasm stems from his own experience of having to learn about technology. He left auditing and management consultancy to join the commercial and sales side of a machine tool importer, eventually bought by Hitachi Sieki.

He believes engineering skill shortages will drive up pay levels. But, he says, security is just as important, and has been missing because of the boom/bust of the last 20 years.

Legg says people still assume that if they are not practical with their hands they won’t make engineers. But engineering today is a completely different from 20 or 30 years ago, with oily rags and dirty factories. It involves very sophisticated levels of technology, particularly computer technology. ‘Kids today are very computer literate. That’s the starting point,’ says Legg.

The MTTA plans to talk to careers teachers and universities about making courses more attractive, as well as raising standards.

Legg also aims to build alliances with associations which have similar interests in creating an investment culture and advancing the cause of manufacturing.

It will be extending overseas links too. In November, a seminar on ‘Sharing tomorrow’s technology today’ will bring a range of experts from Germany to the UK, repeating a similar exercise with Japan last year.

Legg has high ambitions for his presidency. With such enthusiasm, if he had his time over again, might he choose to be an engineer? ‘I got a buzz out of changing,’ he says. ‘I think I’ve made a much bigger contribution to wealth creation than if I’d stayed in auditing.’

Mike Legg at a glance

Age: 50

Education: Wellington School, Somerset; University of Newcastle upon-Tyne: BA in Economic Studies

First job: Robson Rhodes chartered accountants

Current job: Managing director of Hitachi Seiki UK

Interests: horse racing (flat): owns share in three horses in training at Epsom; Reigate Hill Rotary Club; golf