UK: Investment in training - the key to prosperity.

UK: Investment in training - the key to prosperity. - Management Today comments:

Last Updated: 31 Aug 2010

Management Today comments:

Any Tory politicians after a good general election photo opportunity should head smartly to Sowerby Bridge. There they will find Bill Rooney and his Spring Ram management team - a team which has possibly saved the UK balance of payments close on £500 million since the company was founded in 1980.

Maybe a good many UK managers should make the trip as well. For Spring Ram is the enduring business success story of the past decade. From nothing, a business has been built which will soon be employing 3,000 people, which has smashed domestic and, more importantly, foreign competition in the bathroom fittings business in the process, never raised prices and, even in a savage recession, plans to invest £85 million in new plant.

Spring Ram's success is reflected in the MT250 Growth League (see pages 48-56), where we find that the recession has not, after all, taken its complete toll of the enterprise culture. Many of the '80s entrepreneurs soared too close to the sun and came crashing to earth. The survivors - Albert Fisher, Williams Holdings as well as Spring Ram - are happily cruising along in the difficult '90s. When the upturn comes, they should prosper mightily.

But, just as claims to have sighted the first cuckoo do not always herald a real spring, there are deeply divided views about whether the signs that some perceive in the economy do indeed indicate an upturn. The Government is under enormous pressure from business leaders to cut interest rates quickly to give the economy a kick-start. And electoral pressures and rising unemployment will inevitably force Norman Lamont to give way.

But, having gone through all the pain of a vicious deflationary policy, the danger is that inflation may still not have been entirely squeezed out of the UK economy. Whether one agrees or not that imposing high interest rates was the correct policy to have pursued from the start, two years down the road we should see it through to the end, however painful. For it does seem that we might be in the middle of one of those all too rare virtuous moments in the British economic cycle. Pain at home is forcing industry to moderate wage demands, boost productivity and scour the world for exports.

It is a pity that we seem to need the pain to get us to this position. But it is a fact that manufacturing productivity is now improving (4% is forecast for next year) while the British inflation rate is heading south as quickly as the once-virtuous Germans are going north. Car, chemical and textile exports, to name a few, are on the up. Next year export volumes should rise by 4.7%, according to the latest average of business economists' forecasts, while the balance of payments has even moved into a tiny surplus for one month. The deficit will be much less this year than feared - probably working out at some £7 billion.

But whether the brakes come off now or gradually, Britain must be equipped for the intensifying competition ahead. And it will be vicious. Toyota, for example, recently unveiled its planned manning levels at Derbyshire. Car output per head will be 29.4 cars a year, against a current 6.4 for Rover. Unless productivity and flexibility of labour are drastically changed, there will be thousands more car industry redundancies.

But getting industry to invest in the necessary training requires a Herculean effort. Here is one area where an element of compulsion is valid. Firms must be made either to train to rigorous nationally agreed schemes or pay into a compulsory national levy if they cannot provide their own training. This is the key to a more flexible and, by implication, more prosperous Britain. We may even see some more Spring Rams start to flourish.

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