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Last Updated: Thursday, 21 February 2008, 13:16 GMT
UK 'needs new manufacturing strategy'
By Will Smale
Business reporter, BBC News

Workers at the Mini factory in Oxford
The UK is still the world's sixth largest manufacturer

As Indian and Chinese universities pump out an ever-growing number of highly skilled engineers, the future success of the UK's manufacturing base has never been more of a concern.

With India, China and other countries in the developing world already able to beat us on labour costs, where will their growing skills knowledge leave British manufacturers?

Most multinational Western companies have already relocated much of their assembly line manufacturing to the developing world.

The question now is whether a growing proportion of their "high value", highly paid research and development work, or most technical manufacturing, will start to follow suit.

And as Chinese and Indian manufacturers continue to flex their muscles, could their growing skills base eventually see them eclipse their more established rivals in the UK and other Western nations?

'Harmful paradigm'

The question of how the UK's manufacturing sector can best cope with these increased global challenges was put by MPs on Thursday to the chief executive of UK aerospace giant Rolls-Royce.

Sir John Rose, Rolls-Royce chief executive
The notion that we should have more manufacturing apprenticeships is a good thing, but there has got to be somewhere for them to go
Sir John Rose

Appearing before the Business, Enterprise and Regulatory Reform Committee, Sir John Rose said the UK faced a difficult - but not impossible - challenge to boost its manufacturing base.

With Rolls-Royce itself now due to start manufacturing some of its large engines in Singapore as well as the UK, Sir John said it was vital that Britain changed its mindset towards manufacturing.

"We need to lose the language that tends to define the UK in terms of being a post-industrial service economy that has created some paradigm for economic success," he says.

"I believe it is harmful that we have taken that paradigm [to be true].

"It is not a position taken by most countries we see as potential competitors.

"Brazil, India, Singapore, Russia - they are all articulating a vision of high value-added manufacturing being a significant part of their economy. As does the US and Canada - the list is long."

Closer to home, the UK also trails far behind Germany when it comes to manufacturing output as a proportion of the country's overall economy - approximately 16% in the UK compared with 30% in Germany.

As a result, Sir John says it is "easier" to be a manufacturer in Germany, because the country has a larger pool of trained staff and potential suppliers.

'Need for stategy'

But what is the solution?

Rolls-Royce worker
Rolls-Royce employs 20,000 people in the UK

Sir John says the UK government needs a better definition of its agenda on manufacturing, so it can best meet industry needs.

"I think we have got to not be frightened of having a strategy and view of outcomes that we want [for manufacturing in the UK]," he says.

Sir John adds that if that were the case, manufacturers would be better prepared to invest, and as the number of manufacturers in the UK grows, so would the opportunities for young people to join the profession.

"We have got to be clear about the combination of demand and supply," he says.

"The notion that we should have more [manufacturing] apprenticeships is a good thing, but there has got to be somewhere for them to go."

The government counters that it is already started a review of how to boost manufacturing in the UK.

At present, when you send someone on a training programme, too often it is death by Powerpoint
Bob Gibbon, National Skills Academy for Manufacturing

"The government is committed to a strong manufacturing sector," says a spokesman for the Department of Business, Enterprise and Regulatory Reform.

"We are currently working with industry and unions to review our manufacturing strategy, which will help British industry build on its existing strength and reputation as a competitive global player.

"The UK's strong skills, science and research and development capabilities mean we remain one of the best places for high-value manufacturing."

'Better prepared'

Others such as Bob Gibbon, managing director of the National Skills Academy for Manufacturing - a partnership between government and the business world - point to the fact that while the UK's remains the world's sixth-largest manufacturer, it is falling behind on skills training.

With UK industry as a whole spending 30bn a year on skills development, Mr Gibbon says the issue for manufacturing and other sectors is not a need for more funding, rather that it should be targeted more effectively.

"Only about 5% of training fulfils its true potential," he says.

"At present, when you send someone on a training programme, too often it is death by Powerpoint.

"If we are to tackle the skills shortage, training needs to be better prepared, with staff more motivated and the need to make sure business outcomes are actually achieved."

Sir John says the government could equally benefit from such an approach on the world stage: "It is important that the UK is equally as transparent about its objectives and commitment to manufacturing as other countries."

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