Alan Wood: Electric shock: Labour gets a bashing from the boardroom

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The Independent Online

"It doesn't give the right sort of impression," Wood sighs, complaining that relations between management and employees in the real world have moved on from the "dark satanic mills" of days gone by. "It would be good if you could come up with soaps that have a positive spin on business rather than a negative one."

But the Coronation Street scriptwriters will have to wait their turn before feeling his wrath; there are plenty ahead of them in the queue. Last week it was the turn of Alan Johnson, Secretary of State for Trade and Industry, to receive what Wood calls a "polite ear-bashing".

"There are some things that have to be said," he explains diplomatically. And Wood, a some-time adviser to the Government and head of the EEF, the manufacturers' organisation, can be relied on to say them whether the subject is pensions, public procurement, labour laws, red tape, education, New Labour or, yes, even soaps.

A former Sheffield grammar school boy and an engineer by trade, Wood is not a member of the red braces and cigars school of executives and lobbyists. So when he has a dig at the Government - as business leaders are doing increasingly often - it's worth listening to.

"They have talked about the right initiatives. But as the years go by, we become more frustrated by the lack of evidence that the talk has turned into practice." Business is being saddled with more regulation than ever, and with rising pension costs and taxes, he adds. "If life is made much tougher, that can be very dangerous. Someone has to create the wealth to fund our economy and public services."

The New Labour government that once promised to be more business friendly is starting to adopt a stance more akin to the socialist model of "Old Europe", he says. For example, it has introduced laws preventing employees working more than 48 hours a week, and new regulations on the employment of subcontractors. Ironically, the shift has come precisely as the likes of France - which introduced a disastrous 35-hour maximum working week - and Germany are realising that this model does not work and are easing their labour regulations.

"We still have a more flexible labour market in the UK. But it's less of an advantage than it used to be," he says. "We have introduced legislation and increased the inflexibilities. We have shifted in the direction of Old Europe."

Wood has worked for the German electronics giant Siemens, which has operations all over the world, for more than 20 years, so you could argue that he is better placed than most hard-nosed economists to make the comparison.

"Inflexible labour laws are not in the interest of the country," he continues. "People are loath to invest and employ people, scared to death of not being able to release the people when there is a downturn."

Wood suspects that business is an easy target for the Government as it is not particularly popular with the public and is not part of the electorate.

"Business does not have a vote," he says. "Government does what it can to make sure it stays on the right side of individuals who have the vote. If something has to give, it's business."

At the same time, he sees ways to help to make business more relevant and popular. He believes the negative image can be counterbalanced by television programmes such as the BBC's Dragons' Den, where entrepreneurs try to persuade businessmen to fund their start-ups. But more needs to be done, he says.

Pensions are another bugbear. The Government's continued support of defined benefit schemes with retirement at 60 for public sector workers is "anachronistic and terrible", as is Gordon Brown's undermining of the Turner report.

Procurement for government contracts - which makes up 16 per cent of the European Union's gross domestic product - is also a target. Wood was commissioned by the Government to investigate why national companies are preferred over foreign groups bidding for government contracts in Europe. His report, which recommended the introduction of more transparent tendering processes, was published in November 2004. Has there been any discernible improvement?

"Not significantly, I would say," he says diplomatically and somewhat tongue-in-cheek.

He suggests the Government could do more to to push the report's recommendations and help British firms benefit from European public contracts. "[The issue] is the extent to which it can influence its counterparts in Europe. That seems to be very hard [to do]." He says Gordon Brown "went and bashed a few finance ministers over the head" with the report. "But that is not the way to achieve change."

Sometimes it's easy to forget to that in between doing battle with the EU and the Government, Wood actually has quite an important day job. Siemens UK employs 21,000 people at more than 100 sites, manufacturing everything from traffic lights to gas turbines and the magnets used in MRI scanners. It maintains the rolling stock of South West Trains, and its medical devices division is the biggest supplier to the NHS.

The company's largest arm in the UK is Siemens Business Services (SBS), which runs, among other things, the UK Passport Agency and administers the Government's National Savings & Investments. It has also taken over BBC Technology, which employs 6,000 people.

The other big UK division is Siemens Communications, which runs call centres and supplies communications equipment, for example for BT's 21st Century Network upgrade.

Neither this company nor SBS is performing satisfactorily, Wood admits, and analysts speculate they could be sold or closed if they do not improve. Wood says these decisions are not his to make, but suggests that both businesses have been rated as "red" - in the "red, amber, green" traffic lights system he has borrowed from the group's head office to rank its divisions. "We thought pretty openly about which businesses are not performing satisfactorily," he explains. "There is a limited period during which the necessary actions need to be taken."

For all his trenchant views, he seems more tactful than the head of the Siemens group, Klaus Kleinfeld, who dropped a journalist's mobile phone into a glass of water because it was not a Siemens model. Wood puts the incident down to "high jinks". But however carefully he chooses his words - about politicians or his boss - it is certain that if he applied the "red, amber, green" test to the Government, it would get a "red" - and possibly a few points on its driving licence too.

BIOGRAPHY

BORN 20 March 1947

EDUCATION King Edward VII Grammar School, Sheffield; Manchester University (BA in mechanical engineering); Harvard University (MBA)

CAREER

1968-73: engineering management trainee, Unilever

1975-78: head of production, Crittal Construction

1978-81: managing director, Small Fleet Motors

1981: joined Siemens

1982: production director, later managing director, Siemens Measurements

1987: managing director, Siemens telecoms division

1991: managing director, Siemens energy and industry division

1998: chief executive, Siemens UK

Other posts

Chairman of the German-British Chamber of Industry & Commerce; president of the EEF (manufacturers' trade body)

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