The Monitor Blue Skies The global challenge

Globalisation, the pace of technological change and consumer demand have revolutionised the way we all do business.

Our vision at the DTI is to promote a successful, dynamic manufacturing sector that rises to this challenge, producing high value-added products that the world wants to buy, provides well-paid, highly-skilled jobs and competes on the international stage.

Manufacturing accounts for one sixth of our national wealth, over half of UK exports and three quarters of business research and development. The sector directly employs more than three million people, as well as supporting millions more service sector jobs.

We have manufacturers in every sector who are producing highly sought-after products in competitive global markets. And we have world-class manufacturing sectors – sectors such as pharmaceuticals, which exports over £12bn a year, and food and drink with a turnover of £66bn and exports of almost £10bn.

We have the largest aerospace industry after the US, with 120,000 people employed directly by aerospace companies, and others employed indirectly, which adds over £5bn of value to the economy each year.

And last year, 1.6 million cars were produced in the UK, just short of the historic 1.9 million peak in the early 1970s, and much higher than the 900,000 figure of the early 1980s. There was record production last year at Land Rover, and BMW is investing heavily at Oxford to keep up with demand for the Mini. The UK is also home to world-class automotive design and engineering.

Government is investing in manufacturing. Over the last five years, we’ve offered more than £100m in regional assistance to the automotive sector. And at Airbus, £1.2bn in government investment, together with the company’s own huge investment, is sustaining 13,000 highly skilled jobs.

These are investments in success for the long term. We believe in open markets that spur innovation, and work hard to ensure that those markets are fair and transparent.

That’s why we are committed to achieving an ambitious pro-development outcome to the Doha development agenda this year, one that takes a significant step towards a fairer and freer world trading system, with real new-market access and significant reductions in subsidies.

Such a deal could deliver gains to the global economy of around $200bn by 2015, equivalent to 0.6 per cent of global income, providing UK business with more customers and more suppliers.

Success in manufacturing can only come from building competitiveness, raising productivity, encouraging innovation, enhancing skills, spreading best practice and ensuring a strong and stable economy – the approach set out in our manufacturing strategy agreed with manufacturers and their trade unions.

To drive the strategy forward, we set up the Manufacturing Forum, representing industry, government, unions and trade bodies – not just as a talking shop, but to help drive practical change. This forum, which I jointly chair with Kevin Smith of GKN plc, is taking forward actions that will have a real and beneficial impact on UK manufacturing in the months ahead: for example, developing a proposal for a national manufacturing skills academy that will ensure skills-provision meets the needs of employers.

The DTI has also set up the successful Manufacturing Advisory Service to give UK manufacturers the practical support they need to improve their productivity and competitiveness. Delivered in partnership with the regional development agencies and the Welsh assembly, MAS interventions – providing peer advice and support to companies – have generated over £200m of added value for UK businesses in little more than four years.

We’ve also invested £30m toward the establishment of 15 industry forums in key sectors, including chemicals and metals, which have already achieved savings of £365m. And we’ve set up innovation and growth teams (IGT) to plan how the UK can best respond to competitive challenges that key industries will face in the future. The aerospace IGT, for instance, has made real progress in the areas of technology, process excellence, skills and the environmental impact of aerospace, all of which will improve the sector’s competitiveness.

Government will work in partnership with industry in coming the months and years to keep the UK ahead of the game, with a substantial, high value-added manufacturing sector playing its role in ensuring continued prosperity, growth and jobs for British people and our economy.