The past 14 years have seen the manufacturing workforce shrink from 7 million to 4 million people: we lost 2 million in the 1980/1 recession and have lost another 1 million in the past few years. I would not deny that at the end of the Seventies industry was overmanned, but the overmanning level was perhaps one in five, not one in two. The de-manning has reached a point where it is eating into the muscle.
Much has been done on productivity, but there is an awful lot more to be done. The Department of Trade and Industry has accepted that the average gap with our rivals is still 25 per cent. During the Eighties the productivity gains were overplayed because many were based on the batting average principle: if the poor performers go out of business, average performance rises.
What we have not seen are productivity gains through investment in capital equipment, which is why industry is now too small and still not productive enough.
I am on a personal mission to see new manufacturing techniques spread to every part of industry, and see 'world class' companies everywhere. Yet these techniques have not penetrated much beyond the car industry and a thin layer of companies. A recent survey showed only 2 per cent of British companies were world class.
I first saw Toyota in Japan in 1984. I realised then that I was looking at something I'd never seen before and recognised that its techniques could easily be translated to this country. British managers and unions who didn't want to change claimed the methods could work only in a Japanese culture and be competitive on rice-bowl wages. That is a myth.
The problem is that British companies are failing to use the new techniques properly because they are cherry-picking, rather than adopting a package. Too many companies like getting rid of demarcation at the lowest point of production, when changes should be starting at the top.
New manufacturing techniques such as total quality management require a culture shift many British managers are not prepared to make, because it strips them of their traditional leadership role. That is why, when the new techniques have been brought in as a total package, they have seen phenomenal performance improvements. You can't catch up with half a solution incrementally - it is the total package or nothing.
Training must be world class. We are desperately short of serious skills. We cannot get by on the skin- deep skills of the government programmes, which are geared to quantity rather than quality. There should be no demarcation between a degree and a national vocational qualification, when they both represent the same level. We must have a common currency of achievement.
If you wanted to strike a blow for real progress you would storm Oxford and Cambridge. There are, buried within Whitehall and academia, some of the best brains in the country who ought to be helping to make it richer. I know there is a thing called enterprise, but competitiveness isn't built on a million enterprising people. It needs solid, fine brains who can turn their minds to anything.
You will not find a world-beating company with a low-paid workforce and without an excellent employee relationship. The so-called industrial relations reforms have contributed virtually nothing to world class companies' requirements.
It was important to break down some of the bad working practices, but this can only be pushed so far. Prolonged recession is a tyrannical industrial relations manager, and it is this, rather than any genuine shift in relationships, that has kept the strike rate so low. How long would that peace last with sustained growth?
I rank poor industrial relations as the most important defect of all - more important even than investment in technology, because once it is working well, you can then invest in technology and training. You can also handle change - impossible without good employee relations.
That is why we must look once and for all at getting a stable employer-employee structure, with legislative underpinning of employee representation. There must by law be someone who can talk on behalf of the employees.
My colleagues want to go further than that, to the right to union recognition, but I believe unions would flourish within my system. A market of 21 million employed people would immediately be created to which we could offer services, principally expertise in negotiation and representation. We would continue to operate exactly as we do now, although we would have access to millions of people who are frightened to join a union because employers have total control.
I recognise that Honda, which is an excellent company, does not have unions. It does have employee representation, but its weakness is that it has been seen as taking an anti-union stance. A superior model is Nissan or Toyota, because they are operating in a country where there is a culture of trade unionism. If a company keeps trade unions out, there is a danger that when business turns down it will be vulnerable to a hostile union invasion.
Most people have recognised that there is a case for a Budget that builds a permanent bias towards manufacturing investment. What it cannot do is to stop companies paying out excessive dividends. Just as there is an element of truth in blaming the trade unions in the Sixties and Seventies, more recently there has been a dividend approach bordering on the criminal; the money should have been ploughed back into capital investment.
Managers will say that if they don't pay high dividends their share price will fall and they will be vulnerable to takeover. There must be a case for reform to put companies in less jeopardy through doing the right thing.
I am optimistic about the Nineties for two reasons. First, the British car industry will be the best in Europe in a very short time because we have new role models for manufacturing techniques here. Other industries will get on board when they see it actually works.
Second, the Government has realised manufacturing matters. It should now realise it must be part of the team and do what is necessary. In terms of detail on financial and investment reforms, I'd be happy to hand the baton over to the CBI. I would, however, like to see the Government play a big part in spreading manufacturing techniques.
Manufacturing industry is not big enough, and is not likely to grow big enough unless there is a thriving home market and a stable growing economy. Companies would have to be stark raving mad to look at the performance of our economy over the past 14 years and say they can invest with confidence. If the Government puts its money where its mouth is, backing the growth of manufacturing, the tide will have turned.
The 'Independent' is sponsoring a conference, Manufacturing Matters, in London on 20 October. The cost is pounds 295 plus VAT. For booking details call 071-267 2565.
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