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By Howard Wheeldon, Senior Strategist at BGC Partners

15 Mar 11. The Work Foundation whose rather outspoken executive vice chair happens to be Will Hutton says that if the UK is to revive ‘manufacturing’ it needs to focus on areas such as research and design rather as opposed to actually making things. Yes, I know exactly what many die hard engineers and manufacturers are thinking and I agree that if we have come down to this level of thinking that the Work Foundation message will discourage the all too few youngsters that would still seek to have a career in production.

The government should, according to the venerable institution that used to be known as the ‘Industrial Society’ promote what it calls “manu-services” meaning that rather than undertaking manufacturing/production themselves large engineering groups such as Rolls-Royce and BAE Systems would do better to think about generating future income streams mainly from service contracts and licence sales. Let me be very clear about this – I have absolutely no disagreement that industry should be focussing plenty of attention on research, development and design or that once a product or component has been ‘brought to market’ by ‘industry’ that it should attempt to benefit from intellectual property rights or income that could accrue from licensing production of a product abroad. Indeed it is right to remind here that such practice has been going on for very many years across various specific industry sectors such as aerospace, defence and pharmaceuticals. I am no specialist on the latter industry of course but when it comes to aerospace and defence products look no further than the BAE Systems Harrier jump jet or the BAE Hawk Trainer aircraft that were also produced in the US (as the AV8B and Goshawk respectively) and in the case of the Hawk are now also being built in India.

It is also worth mentioning that the practice of selling and licensing of UK designed product in the auto industry is as old as the hills and best exampled by the still in production Hindustan Ambassador car made in India and that is based on the 1954 Morris Cowley. In addition note that Royal Enfield motorcycles designed and made here during the 1950’s and 1960’s are to this day still being produced in India not to mention of course that the venerable Austin Seven from the 1920’s/1930’s that was not only the first ever car to be produced by BMW in Germany but also the very first car to be produced in Japan too. Nothing wrong in licensing product then but in addition too please as opposed to instead of!

There are literally hundreds if not potentially thousands of examples of UK designed product being licensed by their owners for production abroad. Long may that continue but for the most part unless talking of a specific design request it is probably true to say that most will initially have enjoyed a production run here in the UK. Sometimes licensing a foreign company to produce a British designed product backfired as was the case when a Romanian company was licensed to produce the BAC One-Eleven airliner but that in the event ended with only nine aircraft being built. The point though is that while research and design technology at which we British are good has a place it should be alongside as opposed to instead of manufacturing.

To me another central part of this debate is that Britain is manufacturing far too little of what it actually consumes. Yes, we know the reasons why – we paid ourselves too much and priced ourselves out of our own markets, for too long we failed to recognise that our industry was uncompetitive in the mistaken belief that because the rest of the world had always bought from us they always would, currencies and so on. True that UK industrial relations were simply appalling right through the 1970’s and 1980’s when most of the damage was done and management was little better. Our industry was not only ineffi

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