UK: Hail the big Swiss concept - MANAGERIAL PERFORMANCE AND ECONOMIC ACHIEVEMENT. - Some managers are far ahead of politicians in recognising our new role. Robert Heller.

Last Updated: 31 Aug 2010

Some managers are far ahead of politicians in recognising our new role. Robert Heller.

Managers look brilliant when the economy booms and bleak when it bleeds. Hence the Japanese, marching from one soaring peak to the next, have naturally come to embody new standards of excellence. The Briton, stumbling from bust to bust, must in contrast appear inept. But which comes first, the chicken or the egg? The management miracle or the economic hyper-drive?

Evidently, the levels of managerial performance and economic achievement are interdependent. The great W. Edwards Deming has correctly observed that 85% of all corporate shortcomings are down to management. By implication, so is 85% of all success. Yet the mighty post-war work of management have mostly been wrought against a backcloth of bounding expansion. In the cases of Germany and Japan, as the phoenix soared from the ashes, so did productivity surge with production.

British output per head in manufacturing has advanced notably in the past decade: 4.6% annually over the 11-year peak-to-peak cycle. But as Victor Keegan stressed in The Guardian, total output tottered along at only 1%. Managers managing better have been running faster up the down escalator. Given a less arduous ride, their performance would have yielded more positive results than shuttered factories, vanished products and idled hands.

That is no idle dream. The Wall Street Journal reported last summer that Nissan cars 'made in England by Englishmen under British management...are equal in quality to those made by Nissan in Japan.' Productivity also matches Japan's, making Sunderland 'at least twice as efficient as the average European car plant'. That is by no means the typical differential between British and Continental manufacturing. No wonder that production director John Cushnaghan exulted: 'In the European motor industry, there is resignation that Europe can't do it. That's not so. We've done it.'

They've 'done it', of course, in specially blessed circumstances, making a highly developed, given product with equally sophisticated, given techniques, and sprinting up a rising escalator as Nissan remorselessly adds capacity - and sells its output. Yet the encouragement still remains: the British disabilities disappear, if only you remove the constraints and apply abundant managerial talent in the correct, conducive technical and business environment.

But that's an Everest of an 'if only'. The Thatcher disillusion is the latest painful evidence that the constraints cannot be erased within the political and economic status quo. The undeserved severity of Britain's second manufacturing slump in a decade is the direct result of managerial incompetence, not in companies, but in Westminster and Whitehall: of incessant failure at managing the economy of an independent sovereign state.

In the trade-off between satisfactory growth and stable prices, Britain has uniquely contrived to have neither. But managers are no longer political prisoners. Pilkington's landmark decision to transfer its centre of gravity in flat and safety glass to Brussels is a blow to St Helens, but a blow for reality. Grievous corporate harm has flowed from the attachment of managers to a British home market which is neither home nor, in scale, much of a market.

But real world changes beneath the surface of the false dawns and the recessionary nightmares have accentuated Britain's inevitable progress towards a new status: Big Switzerland. That denotes a fully European economy, lacking global strength in some key industries (like cars and consumer electronics), but rich in financial services; profitably housing huge multinationals whose interest in the local market is only incidental; and also accommodating many specialised, world-class manufacturers and service businesses, dripping with added value.

For many managers (let alone politicians) the Big Swiss concept requires an about-turn in mind-set. The banks, for example, are still too preoccupied with their domestic operations and too little obsessed with their relative international weakness.

In manufacturing, companies like Hawker-Siddeley have been desperately (and in its case fatally) late in embracing new methods - as at Hawker's Loughborough plant, 'the Brush'. The Financial Times reports that a 'quiet revolution' in the latter's 'manufacturing systems, product development strategies, workforce organisation and training' was in accelerated progress before BTR struck.

Trying to implant Japanese-style, world-class techniques in half or less of the usual time is worryingly ambitious. But British managers - witness the Strathclyde Institute's heavily attended, high-level Strategic Manufacturing Conference every November - have access to, and grasp of, all the knowhow needed to play catch-up. They can't win, however, unless they compete on the vast European pitch - and beyond that in the global market. And in this context, laid down by both history and necessity, fears for economic sovereignty are much worse than laughable.

A single European currency couldn't do British industry even half the horrendous damage inflicted by the defence of sterling down the years.

Fortunately, Pilkington is not alone: other managers have marched far ahead of the politicians in recognising Britain's new role as a great region of a greater Europe. Whether or not, as some think, Sunderland is Europe's best car plant, such standards, achieved within the European context, are the only hope of a Big Swiss breakthrough: in SWOT analysis terms, of at last escaping from Weaknesses and Threats to turn undoubted Opportunities into renewed Strengths.

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