Government ‘must be ambitious for UK manufacturing’

CBI director-general designate John Cridland said UK manufacturing was, in many ways, the unsung hero of the UK economy. Big productivity gains in the past ten years had made it leaner than ever before, and it was now well placed to lead the country's economic recovery. "To achieve this, however, the Government must act fast," urged Cridland. "It should build on the sector's strengths, work with business to harness its innovation, and create a tax and regulatory environment that helps UK manufacturers drive up growth in productivity and exports. "We want the Government to be ambitious: focus its support on the sectors with most export growth potential, and improve the UK's competitiveness as a place to invest." Since 1997, productivity in UK manufacturing has increased by 50% -- about double the growth in productivity for the economy as a whole. The sector accounts for 46% of the UK's exports and 74% of its research and development (R&D). The CBI set out three key ambitions for the manufacturing sector: • Achieve and maintain a target productivity growth rate of 5% a year: from 1998 to 2008, UK manufacturing's productivity growth rate of 4% was ahead of Japan, France, Germany and Italy, but lagged behind the US and South Korea. • Demonstrate leadership in all aspects of innovation: to compete in and develop new markets, such as low carbon, and to better exploit existing markets, the UK must build on its already world class reputation for research, design and creativity. • Double the growth rate for UK manufactured goods exports to at least match the OECD average by 2020: from 1997 to 2007 this figure was the lowest among OECD countries. To match the OECD average, the UK needs to double its average export growth rate to around 8% a year. Andy Reynolds Smith (pictured), divisional chief executive of GKN and chairman of the CBI manufacturing council, said: "The UK will need to develop its industrial capability to drive sustainable growth at home and internationally if UK manufacturing is to remain a world leader. "The rise of emerging economies, such as India and China, is creating a new generation of consumers eager to buy goods and enjoy a better lifestyle. But competition for these markets will be fierce, as will the fight to attract and retain manufacturing investment to strengthen the base at home. "The UK needs to keep one step ahead of the game. The Government must ensure that connections with businesses and universities are strong, focusing on the development of industrial capability and helping manufacturers to access new markets such as Brazil, China and Africa. It should also use its own purchasing power to help UK companies develop business for the long term. "We need integrated thinking across all aspects of manufacturing, including technology, infrastructure, procurement and skills. Ensuring the UK builds a healthy skills base is vital in securing the future of our manufacturing industries."