Speech

International Festival of Business: Blue Skies and the future of manufacturing

Business Secretary Sajid Javid discusses the importance of innovation in British industry.

Good afternoon everyone.

It’s great to be here in Liverpool.

It’s great to be at the International Festival of Business (IFB).

And it’s great to be kicking off the Blue Skies sessions.

Looking at the weather forecast I fear this is the only place we’re going to get blue skies today!

We’re here to talk about the future of manufacturing.

And it seems kind of appropriate that we’ve gathered next to the China and India suites.

Because within the past couple of decades both China and India have rapidly established themselves as major global manufacturers.

And that presents something of a dilemma for more traditional manufacturing countries like the UK.

Because developing nations often have a lot of factors on their side.

Cheaper labour, lower standards.

Raw materials on site.

And, sometimes, governments that are focused on economic success at the expense of workers’ safety and wellbeing.

Faced with that, it’s hard to see how British manufacturers can possibly compete.

We have higher standards.

Higher wages too, both secured over many years of development and growth.

And while we’re rightly proud of that, it translates into higher costs.

The way I see it, we have 2 choices.

We can get into a race to the bottom with the developing economies.

We can cut corners, costs and quality in order to get by.

Or we can do what Britain has always done.

We can innovate.

We can do things nobody else can do.

We can take our skills and our experience and our history and our heritage and apply it to the challenges of the future.

And make no mistake, the future is coming and it is coming fast.

Whether you call it Industry 4.0 or the Fourth Industrial Revolution, it’s impossible to deny that the way in which we live and work is undergoing a seismic shift.

People often talk about how nobody would have predicted a company the size of Kodak suddenly disappearing from view.

But the biggest changes aren’t going to be in what we manufacture so much as how we manufacture.

Where we manufacture.

Even who does the manufacturing.

From 3D printing to virtual factories to the internet of things, the old order is being turned on its head.

And I don’t want to see British manufacturers just responding to the changes and challenges the future will bring.

I want to see them shaping that future.

But before I get on to that, let me set one myth to bed once and for all.

I often hear people say that the UK is no longer a manufacturing nation.

That we simply don’t make things anymore.

That’s utter nonsense.

Our service economy has been an incredible success story and now accounts for something like 80% of British jobs.

But manufacturing is still going strong.

It contributed £168 billion to our economy last year.

In the past 10 years it has grown 2.5 times faster than the rest of UK PLC.

The sector spans almost 90,000 companies and provides work for literally millions of people.

And it accounts for half of all British exports.

The world wants what we’re making.

2015 was the most successful year ever for our £23 billion aircraft industry.

Delivery numbers are up 44% since 2010.

A new car rolls off a British production line every 20 seconds, with 80% destined for export.

So around the world people are flying on British-built planes and driving in British-built cars.

And the Australians are even throwing British-made boomerangs!

That’s right, the world’s biggest boomerang manufacturer is based in south-west London.

And our Aussie friends provide one of their biggest export markets.

Although there’s a chance they’re just exporting one boomerang that keeps on coming back!

But the world doesn’t just want to passively consume what we’re selling.

The world wants in.

Since 2010, foreign direct investment in British manufacturing has risen by 60%.

Now, I used to work in international finance.

And I know that investment on that scale is a massive vote of confidence in a country’s economy.

It’s not all plain sailing.

Unprecedented conditions in the international steel market have had a devastating impact on too many British communities.

But alongside the steel industry, the unions and politicians of all parties, we’re doing all we can secure the future of UK steelmaking.

That work is beginning to bear fruit.

The British Steel brand has returned to Scunthorpe thanks to Greybull Capital.

And bidders from around the world are keen to take over Tata’s remaining British assets.

People know that British steelmakers are the best in the world and they’re willing to invest serious money in the sector.

So British manufacturing has a proud history, and strong present.

And, most importantly, it also has a bright future.

As I said, that future doesn’t lie in a race to the bottom with developing economies.

It lies in using our unique capability to shape the future of a sector that we did so much to create 2 centuries ago.

That’s something we’re already excelling at.

Around 70% of all UK research and development (R&D) spending takes place in manufacturing.

This is a sector that’s used to pushing boundaries, used to experimenting.

Used to turning the blue sky thinking of today into the must-have products of tomorrow.

And I’m one business secretary who’s determined to play an active role in making that happen.

Now it’s not the job of government to come up with the ideas.

That’s not something politicians and civil servants are generally very good at!

And it’s certainly not our job to try and pick winners – to look at one company or one individual and throw taxpayers’ money at them to try and secure success.

But what we can, should, must do, is create the environment in which modern manufacturing can thrive.

That’s why, later this year, our national innovation plan will provide a clear framework for ensuring the UK is at the forefront of the fourth industrial revolution.

But our support goes way beyond that.

We’re also encouraging long-term investment and a dynamic economy with open and competitive markets.

That includes cutting corporation tax to 17%, slashing a further £10 billion of red tape, and investing £6.9 billion in the UK’s research infrastructure up to 2021.

We’re also making sure our young people have the skills they need to fill the jobs of tomorrow, for which job descriptions have not yet been written.

We’re developing digital skills capability.

We’re reforming the computing science curriculum.

We’re establishing a National Institute for Coding, and the new National College for Digital Skills.

And Higher Apprenticeships and Degree Apprenticeships are also helping to develop the higher level technical skills that manufacturers need.

Our High Value Manufacturing Catapult is helping smaller businesses access the R&D technology and knowhow they need in order to grow.

In its first 5 years of operation, around £300 million has been invested through the Catapult.

And in the past year alone it has worked with more than 1,600 private sector clients on over 1,300 projects.

Manufacturing is now a truly international industry, so this work doesn’t begin and end at the UK border.

I’m personally working with the World Economic Forum to shape the focus of its work on the fourth industrial revolution.

The G20 has established a new industrial revolution task force.

And the UK is leading an EU-wide project on the digitisation of European industry.

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Now it’s no coincidence that the IFB is being held here in Liverpool.

This is a city whose reputation is built on creativity, innovation, and reinvention.

Whether it’s in industry or music or football, Liverpool is known throughout the world for doing things differently.

The Albert Dock, right next door, was revolutionary in its day, the first of its kind.

Today it’s home to Tate Liverpool and The Beatles Story, both showcases for groundbreaking creative talent.

Up on Prince’s Dock you can find the Liverpool City Region Local Enterprise Partnership.

It has a vision to make the city region a global manufacturing hotspot with the smartest networks, talent, technology and investment.

So Liverpool is synonymous with innovation.

And if businesses are going to thrive in the global markets of the 21st century they have to embrace that spirit themselves.

That’s what this session is all about.

Over the next few weeks, each day will end with ‘Blue Skies’.

It’s an opportunity to hear from some of the great creative thinkers from all kinds of different fields.

The people who, as George Bernard Shaw put it, “dream things that never were; and say ‘why not?’”

There’s the first sailor to complete a non-stop solo circumnavigation.

The politician who ended apartheid.

The extreme adventurer who’s all set to become the fastest woman on water.

Thinkers and dreamers, sure.

But most important of all do-ers.

They’re the kind of people you’re going to be hearing from at Blue Skies.

And they’re the kind of people I want to be hearing from as Business Secretary.

My door is always open to blue sky thinkers who can help British industry thrive in the years to come.

Because Liverpool has long been inspiring the world.

And in the 21st century I want Britain’s manufacturers to do the same.

Thank you.