March of the Mittelstand: Osborne wants manufacturers to go Deutsch

The Chancellor has today announced a scheme to forge closer links between large firms and their small suppliers. In principle, it sounds like a good plan.

by Emma Haslett
Last Updated: 19 Feb 2013
The Government’s been harping on about much it would like the UK’s manufacturers to emulate those of the German Mittelstand, the core of mid-sized manufacturers that makes German engineering so famous, for some time now, saying it wants a return to ‘Made in Britain’-style manufacturing. And now Chancellor George Osborne has come a step closer to achieving his Teutonic ambitions, with a special scheme to create closer ties between large British firms and their smaller suppliers. Which, in theory, is quite a good idea. Particularly given the fact that even Osborne has now admitted that we’re ‘not immune’ to the debt crisis currently facing the eurozone…

Osborne made the comments during a keynote speech at the Telegraph’s Festival of Business conference in Manchester this morning. Apparently, the Government’s signed up everyone from BAE Systems to Tesco and Network Rail to provide ‘support, advice and practical help’ to the smaller companies in their supply chains. (A few suppliers who’ve emerged shaken from Tesco’s Cheshunt Lubyanka might have a thing or two to say about that). That’ll take the form of ‘work shadowing’ of companies’ top execs, training courses and even the sharing of research and development facilities.

Of course, all of this seems great in principle, but the question is whether Osborne can make good on those promises. A company like BAE Systems, for example, has hundreds of small suppliers – making sure all their bosses have a chance to shadow the likes of Ian King, its CEO, would be impractical. And it’ll be interesting to see just how many resources both the Government and the companies in question plan to dedicate to the cause. It’s not very encouraging that when MT rang the Treasury press office this morning, they seemed baffled. And besides – it’s about 20 years too late for the UK’s manufacturers to catch up with the Mittelstand.

To be fair to Osborne, he was very forthcoming on the subject of the euro crisis. He said the UK is ‘not immune’ from the troubles brewing in Europe, but added that he was ‘confident we can weather this storm’. He also made it clear that in the Government’s opinion, for the euro to get back on track, there will need to be more co-operation between governments. ‘Crucially, my European colleagues need to accept the remorseless logic of monetary union that leads from a single currency to greater fiscal integration,’ he said. Wonder what the Mittelstand would have to say about that?  

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