Oral statement to Parliament

Manufacturing Summit 2011

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Introduction Good morning, it’s a real pleasure to join you for today’s Manufacturing Summit. Despite what some people think, the UK remains…

Introduction

Good morning, it’s a real pleasure to join you for today’s Manufacturing Summit.

Despite what some people think, the UK remains one of the world’s leading manufacturing nations. Industry generates £140bn a year to the economy, and it accounts for 55% of the UK’s total exports.

But in recent years there has not been the long-term planning across Government that’s needed, if we are to support UK manufacturers to compete in the global marketplace.

So last year we launched the Advanced Manufacturing Growth Review, which is a root-and-branch analysis of the barriers to growth, and the structural reforms needed to encourage a balanced, sustainable economy.

We have already taken positive action to help industry - with lower and simpler corporate taxes; a crackdown on unnecessary red tape; and a deal with the banks to boost access to finance.

We have also taken some crucial early decisions which will support UK manufacturers.

First, we are seeking to accelerate the commercialisation of new technologies, by investing £200 million in Technology and Innovation Centres.

Second, we are boosting competitiveness with new funding for the Manufacturing Advisory Service

And third, we are backing SMEs looking to export more, by setting up an Export Enterprise Finance Guarantee scheme, which will underwrite finance worth up to £1 million for individual small firms.

Why industry’s image matters

But today I want to focus on another crucial factor that, alongside investment capital, will underpin industrial competitiveness - namely human capital.

There are two issues here. The first is tackling head-on the outdated perceptions of what modern industry means. The second is ensuring we equip people with the skills that business requires, and which they’ll need, to forge a successful career.

Changing people’s negative perceptions really matters. It is essential if we are to rebalance the economy, and if industry is to be able to recruit the skilled workforce it needs.

Take the need for graduates in Science, Technology, Engineering and Mathematics. Around 43% of those who graduated in 2009, did so with a first degree in a STEM subject - yet just 5% went to work in manufacturing.

In other words, many young people who have the potential skills industry needs, are going elsewhere. They don’t see their careers in engineering or manufacturing.

Clearly much needs to be done to change their perceptions; to fire up their imaginations and make sure they know about the dynamic, rewarding careers widely available in industry.

UK Manufacturing success

One of the many myths that has been allowed to go unchallenged in recent years, is the corrosive notion that manufacturing is irrelevant to our economy; that Britain is no longer a nation which makes things.

Nothing could be further from the truth. The UK is producing a wide range of cutting-edge products, in businesses across the country. Let me offer some examples:

  • Alexander Dennis, based in Falkirk, is the leading supplier of low-carbon buses, in Europe.
  • Aircraft ejection seats engineered by Martin-Baker in Buckinghamshire meet the toughest safety standards - and have saved nearly 7,300 lives in 93 air forces around the world.
  • Concrete Canvas, based in Pontypridd, South Wales, has developed a revolutionary product called Concrete Cloth - it can be laid like carpet, but hardens when water is added to create a concrete surface. It is now being sold around the world.
  • Swann Morton in Sheffield designs high quality surgical blades and scalpels and exports to over 100 countries.
  • SSTL, based in Surrey, is the world’s leading maker of small satellites used to map and monitor civil emergencies.

These are just a few of the many innovative UK manufacturers leading the way in new sectors, developing frontier technologies and finishing ahead of fierce global competition.

So what’s needed now is to spell out that British design, engineering and manufacturing are world-class.

Showcasing manufacturing careers

That’s why my department is hosting a series of exhibitions promoting UK firms and their products.

Among other things, we have already exhibited a zero-carbon motorbike, and Airbus wing components made out of composites. In the coming months we will be showcasing many more ground-breaking products.

In addition, we recently announced plans for a week of factory ‘open days’ right across the country, to help redefine manufacturing’s public image and raise its profile.

By throwing open their doors to young people, innovative industrialists will help inspire the next generation of talent to see manufacturing and engineering as exciting career choices.

Salaries

And we can do that in part, by nailing the myth about low salaries being the norm in industry. There is a common misconception that engineers are poorly paid when compared to other popular choices, such as accounting or the City. In fact, skilled engineers enjoy comparable levels of pay.

According to the Office for National Statistics, the median salary for professional engineers is just over £36,000 a year - that is in the top 30% of UK salaries, and 40% above the median national salary.

And as their careers progress, experienced engineers can expect to rise even higher up the income scale. Last year, the median annual salary for an experienced chartered engineer was £55,000 - that’s in the top 10% of UK wages.

But young people just don’t know this. So we - Government and industry - need to spell out to them that if they are looking for a well-paid, skilled job with good prospects, manufacturing and engineering offer a wealth of opportunities.

We intend to do a lot more work to get this message out in the future. We are developing a range of ideas as part of the Advanced Manufacturing Growth Review, and we expect to publish proposals alongside the Budget later this month. And we would welcome your views.

Of course, it’s not just a question of attracting young people into the sector. Once they have started, industry must ensure they get the training they need so their careers can flourish.

Skills

So we are transforming the skills and further education system in order that industry can meet that demand.

We are setting further education colleges free from bureaucratic control by Whitehall. We want to ensure they support economic growth by responding to the needs of employers and learners - and not the whims of politicians and bureaucrats.

Our aim is to empower employers to shape the skills system, not just advise on how it should look.

We are also committed to creating a new generation of University Technical Colleges. Students with technical aptitude should have the option of starting vocational training from the age of 14, alongside their core academic education.

There is substantial demand for these institutions from businesses and communities, who are enthusiastic about the benefits they would bring. We intend to meet that demand.

And we are increasing funding for adult Apprenticeships by up to £250 million by the end of the Spending Review period, creating up to 75,000 more places per year than the previous Government.

This expansion could not take place without the commitment and far-sightedness of employers. But we want to see more employers recognise the value that apprentices add to the business - and that’s why we are making funding available to allow numbers to grow over the next few years.

In future, a larger proportion of funding will be aimed at SMEs, so quality workforce training is an affordable option for more of them. That’s a real boon for the many innovative small firms in the manufacturing sector that rely on having the right skills available in the workplace at the right time.

Conclusion

It’s important we get this right - so we can ensure that a reinvigorated manufacturing sector is, once again, at the heart of a strong and balanced economy in the UK.

That’s why we are cutting business taxes and red tape; backing new technologies; bolstering our industrial competitiveness; and extending support for exports.

And it is also why we intend to transform the industry’s image so that it can recruit the people it needs, with the skills that it needs.

It won’t be an easy task. But it is vital we tackle it now, so the wealth of career opportunities available in manufacturing once again attracts Britain’s brightest and best.

I believe that if we each play our part - Government and industry - we will enable our country’s industrial potential to finally be fulfilled.

Thank you.