Change needed where it matters: Manufacturing in the UK cannot afford to stand still, maintains David Bowen

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The Independent Online
CHANGE is one of the trendiest words in the business lexicon. Management, we are told, is all about change. We can call it restructuring or even 'business process re-engineering' - but it all comes down to the same thing.

But how do you measure change? And how do you work out how far it has gone?

Take change in manufacturing. Tomorrow week, this newspaper is sponsoring a conference on manufacturing which will, incidentally, be the first opportunity to hear the new shadow Trade and Industry spokesman, Jack Cunningham, lay out his views. The immediate question will be what, if anything, the Government should be doing for industry in the Budget.

Behind that lies a question that is extraordinarily difficult to answer. How good is the manufacturing base we have? To put it another way, how much has it changed?

Seven or eight years ago, I started writing about the great tremors that were running through Britain's manufacturing industry. Everywhere I looked, companies were introducing the latest Japanese-style management practices, while it was impossible to turn round without spotting another seminar on total quality management. It was easy to infer that British industry was undergoing wholesale upheaval, and it would not be long before the Germans, and even the Japanese, would be looking nervously over their shoulders.

The strange thing is, nothing has changed since then. Or rather, there seems to be just as much change now as there was then. There are still weekly seminars on quality (interspersed with ones on business process re-engineering), and we read regularly that British industry has suddenly discovered the joys of Japanese techniques. To repeat the question, how much has it really changed?

The answer is this: while the best manufacturers did change in the 1980s, the trickle of improvement has now turned into a torrent. Most early progress was made in the motor industry, where there was a nice easy model - the Japanese one - to copy. That is why Rover, which as British Leyland was a joke, is now one of the most highly regarded car companies in Europe. It is also why German car companies are buying increasingly from UK component- makers (their low costs are important, of course, but the Germans would not touch British parts unless their quality was up to scratch).

But in the last few years the benevolent virus - if that is not a contradiction in terms - has been spreading much more rapidly. This is partly because all those seminars are getting their message through. And it is partly because time has swept more and more old-style managers into retirement, and replaced them with youngsters more likely to encourage change. But perhaps most of all, it is because the recession has given companies time to get their house in order. Rather than panic, as so many did in 1980/81, managers have been streamlining their factories and their organisational structures. Often this has involved making redundancies - and what better excuse for sacking people than a deep recession?

Black Wednesday's sterling devaluation in 1992 may have been the trigger for an upsurge in export optimism, but the continuing strength of British overseas sales is a testament to the improved quality of UK-built products as much as their low price. Remember when Ford had to reassure the Swiss that the cars they sold there were not made in Britain?

It is reasonable to be more optimistic about the prospects for British manufacturers than we have been for many years - about 150, in fact. This does not mean the change can stop. Managers must keep on plugging away; when they have got their quality in order they will have to learn about competing on product design (in Japan, they do not even think about quality any more).

Then they will have to move on to something else.

But it will be impossible to be truly optimistic until manufacturers change their attitude to investment. The fundamental problem with the manufacturing base is that it is too small, and will not get bigger until more machines are installed, more factories are built. Attitudes need to change both in industry and, as important, in the temples of short-termism, which insist on such rapid paybacks. It is time for a bit of business process re-engineering in the City.

The Manufacturing Matters conference is being held on 31 October at the Queen Elizabeth II Centre, London, SW1. Phone 071-976 0682 for details.