UK: Undermanaged, underdeveloped, underinvested, undereducated ... sinking Britain. (3 of 4)

UK: Undermanaged, underdeveloped, underinvested, undereducated ... sinking Britain. (3 of 4) - One other important point in favour of foreign ownership: immune to short-term stock market pressures, European and Japanese companies can typically take a muc

by
Last Updated: 31 Aug 2010

One other important point in favour of foreign ownership: immune to short-term stock market pressures, European and Japanese companies can typically take a much longer investment view than their Anglo-Saxon counterparts. Many former Plessey managers have found medium-term prospects transformed within the corporate embrace of Siemens - not least because now there IS a medium term. Few envy their colleagues who have ended up in GEC.

This is already an indirect comment on the second growth condition - how far UK companies are in control of their own fate. The overall judgement must be: not far enough. This is not to deny some important, even epochal gains in the 1980s, particularly in human resources. Whether because of fear, anti-union legislation or, more charitably, a growing realisation that new manufacturing techniques actually depend on full employee involvement, many companies have seen an unprecedented and perhaps permanent improvement in working practices and relations. "The industrial relations changes are positive and permanent," believes New. "The mutual understanding is astonishing compared even with the early 1980s, let alone the 1970s."

Also encouraging is evidence of a gradual change in the calibre of entrants into manufacturing. This cannot be said of the production function itself, which remains largely undervalued, underpaid and shunned by graduates. Engineers still want to go into R and D. But more broadly, Alex Knight, managing director of the consulting group at Ashridge Management College, notes that having spent the 1970s and 1980s rediscovering the needs of the customer, companies are now switching attention from marketing to the means of satisfying them. Says Knight: "We're getting younger and brighter people on manufacturing courses - not necessarily from a manufacturing background. And companies are sending us more women than ever before. That's certainly good."

The third major area of improvement is equally important - and still more basic. To be able to improve, a company has to want to. Ten years ago few firms outside Japan had any notion of the kind of change that was needed. It was not just that they had never heard of total quality, just-in-time (JIT), quick-change tooling or the control and problem-identifying techniques which the best companies now knit into a process of continuous improvement. They did not even have a framework for thinking about it. At Lucas, the group's manufacturing supremo, Dr John Parnaby, notes that seven or eight years ago "we didn't understand what our competitors were doing. Now we know exactly what to do and how to do it." That does not make it easy. "But I'm more optimistic now than I was then."

One of engineering's successful survivors, Lucas, like Rolls-Royce, JCB, ICL and a few others, is a good representative of the new industrial paradigm. Compared with 10 years ago, Lucas is more international, more focused, more broadly based in both product and geographical terms, and infinitely faster moving. In manufacturing effectiveness and organisational and strategic sophistication it is orders of magnitude better than it was. Yet on world standards, admits Parnaby, Lucas is perhaps "half to three quarters of the way there". Some plants are right up with the very best; others still have a long way to go. Survival entails constant "re-architecturing" of the group's competitive position - moving out of some areas, up the value chain in others - as well as continuous improvement of manufacturing performance. World class manufacturing is not enough. World class management is the only guarantee of long-term survival.

Lucas's experience is a brutal reminder of new global realities. As Parnaby says: "You can't afford to be three quarters of the way there for ever: you'll just disappear." This is not good news for most UK manufacturers, which have only just begun the long march to greater competitiveness. The pessimistic view of Kearney's Young is that just 5% of UK manufacturing firms really know what they are doing, with perhaps another 20% waking up. Jordan, a notable supporter of the new manufacturing techniques, is blunter still. He laments: "I can get excited about the really successful companies. But in engineering you could fit them into a telephone box."

To emphasise the point, there is a strong feeling among observers such as Young, Jordan, Harvey-Jones and New that, while real, the gains of the early 1980s have not been consolidated. The domestic boom of the second half of the decade, accompanied by rising profits, allowed manufacturing firms off the hook. Sighs Harvey-Jones: "We have this terrible tendency to be too easily satisfied." Young warns that judging competitiveness by the ability to hang on to domestic market share will be largely irrelevant in the new vista of international competition after 1992: "I'm very sceptical about companies' preparations for this dimension."

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today