Digital skills will secure a brighter future for next generation

Growing and strengthening the economy hasn’t really featured in the General Election debate. In part this may be because on the surface the economy seems be doing fine. But if you dig a little deeper it quickly reveals a serious problem.

The problem is jobs and living standards related. Put simply, the economy is at its core unbalanced. It doesn’t create anywhere near enough of the exciting, high tech, well paid jobs the next generation needs. As a country, we simply don’t innovate or create and make enough things that we can sell around the world. This has left most regions outside of the south east poorer and unable to generate opportunities and wealth.

And this place we find ourselves in is not an accident. It is the result of several decades promoting a national strategy of unbridled and a largely unrestrained markets. It served us well, when digging us out of the 1970’s industrial crisis, but eventually the associated short-term thinking and chronic under-investment in industry, skills and infrastructure has led to an equally unsatisfactory situation of not enough high-end, high tech industries and jobs.

I remember how this focus away from manufacturing and industry impacted my education when I attended to my local comprehensive in Leeds in the 70’s. I was actively discouraged from studying practical subjects – the likes of woodwork and  technical drawing, yet engineering was clearly my passion. I was part of an engineering generation that largely saw the automation driven third industrial revolution pass us by.

A nightmare situation for me would be to see this next generation not be encouraged and given the chance to work with the technology that will define this fourth digital industrial revolution we are currently living through.

There is however a way to change this and rebuild our jobs and skills base. That is to use this fourth industrial revolution to create new industries and with that many more new high tech and well paid jobs. Through that we can again become a nation of creators and makers that sell many more goods and services around the world, bringing significant wealth into our country.

To achieve this, we need to take a very different approach. One where industry working in partnership with Government creates long term support mechanisms and policies that encourage investment in these new industries.

A fundamental part of this is to look at the skills and training of our people through a different lens.

We need to create a vision and a sense of excitement about the possibilities that exist for young people in this new digital economy. And we need up-skill workforces up and down the country so that we embrace new technologies like artificial intelligence and collaborative robots (or ‘co-bots’ machines that assist and work alongside humans). Positively embracing new technology rather than being afraid of it will be vital if we are to unlock the wealth the next generation needs.

This is going to take a massive re-think and a radical shift in economic and education policy. It requires much more investment, much better coordination and a different way of measuring the outcome of schools, colleges and universities. The future is much more about the employability of students and teaching the practical and team orientated skills needed to work in this rapidly developing new economy.

When I talk to teachers, parents and young people there is a vast void in the information available about the exciting jobs available in this new industrial revolution. So it’s not surprising that the teaching
curriculum falls well short of what is required to prepare young people for this new world of opportunities. This is so badly needed because these new exciting tech jobs will help younger people secure a home, secure a pension and improved lifestyles.

It is because of these opportunities that I am delighted to be working with a team of business leaders on an Industrial Digitalisation Review (#IDR), that aims to help bring about a positive change in how we better master the opportunities arising from this industrial revolution. A key part of that work is radically influencing education, employment and skills policy. It’s something the next Government, whoever that will be, will need to grasp as quickly as possible after June 8th.

We’d love to hear your views, whether you are involved with education, business or policy making. What can we do to embrace this technology revolution we are witnessing, harnessing it so that it becomes a generator of future opportunities and better living standards for the next generation?

To find out more about the review and give us your views please visit:

http://industrialdigitalisation.org.uk/your-voice/

A positive post-Brexit future for the UK

It was an honour, and good fun to participate on BBC Question Time recently.  I watch the programme regularly and we are living through a truly momentous period in our political and economic history, so I was keen to contribute to the national debate during this time.

On Brexit, I do not think there is any point looking back.  The decision has been made and right now, we have to do our best to make it work.

But after the recent rows between EU and British politicians, I think that everybody needs to calm down.

Arguing about who said what, to whom or bickering about whether the EU needs us more than we need them or vice versa, isn’t going to get us anywhere.  The truth is we both need each other after Brexit and we will both  be stronger if we can find a sensible way to trade and work together in the future. I would like to hear much more about the vision and ambition of Britain post Brexit; in which areas we will continue to collaborate with the EU and how we intend to make more of other global relationships, and I don’t mean soundbites, but long term strategic economic options.

On the other hand, I don’t think that the UK should just roll over to the EU on our future relationship – from my own experience in business I know that sometimes you do have to be ‘bloody difficult’ and hold your ground in negotiations, but you also need to think of the bigger picture, and that means understanding where the other side is coming from and making compromises. That in my experience is the more difficult and important part in any negotiation, than being ‘bloody difficult.’

The big issue facing our economy, is that it hasn’t supported a growth in living standards since the economic crash in 2008.  It is therefore no surprise that many people are struggling to cope and we do not have enough money to invest in public services.   Also the world of work has changed; a career for life is far less common these days and a new industrial revolution is taking place, which means that because of technology there simply will not be the need for some types of jobs in the future.

I believe that the only way that we will adapt to this and prosper as a country is if we take a new approach to our economy.  We need to invest much more in skills and infrastructure and we finally need that plan – an industrial strategy – to make Britain the best place in the world for creating and adopting new technologies and businesses, especially digital ones. This will begin to re-balance our economy towards more high value and knowledge rich new industries, like additive manufacturing , or artificial intelligence.

If we can get this right, then instead of worrying whether our jobs are going to be replaced by robots, we can make sure that our young people are training to be the designers, software developers or engineers that will drive these new industries. In other words that we have a clear strategy that makes sure through these new digital technologies we create more opportunities and jobs that we end up displacing through their introduction.

Brexit makes all this even more important, as I am very clear, and there is no point pretending differently, there will be some new costs to trading and business after Brexit, and that means even more so that only high technology and high innovation industries will be the ones that can thrive and create prosperity here. So, we need a cross party approach to supporting this much more strategic approach to industry and give our economy the best chance to prosper, create many more well paid jobs and export more to the world

I also attach a short video which builds on another one of my points on Question Time, that we need to stop seeing business as the bad guys.  There is a very important society aspect of business, and regarding the Brexit negotiations, it is certainly not all about money and trade deals – as important as they are. You can watch it here.

Industrial Digitalisation – A cure for the British Economy

I am delighted and honoured to have been asked to lead a Review on Industrial Digitalisation as part of the Government’s recently published Green Paper on Industrial Strategy. Today, we held our first launch meeting with top companies from across the country, including IBM, Rolls Royce, GKN, Cisco and Accenture, along with many other business leaders. Nick Hurd, Minister for Climate Change and Industrial Strategy joined us and we are hoping that this initiative will turn into a very strong partnership between Government and Business and create significant value for the UK economy.

You will probably  have heard about the new modern Industrial Strategy, launched by the Prime Minister recently, and in this blog, I wanted to talk about this and explain what we will be doing with our review – and why it is especially important for our economic future.

The first obvious question is what is Industrial Digitalisation? It has sometimes been described as Industry 4.0 or the 4th Industrial Revolution.  And you will hear jargon such as the Internet of Things, Connected Devices and Big Data.  But at its most basic, Industrial Digitalisation, and the purpose of this Review, is to work out how UK manufacturing can increase its use of digital technology and automation to become more productive and competitive.

Of course, there is nothing new in this – the essence of manufacturing has always been about using new technologies and finding new ways of working.  But this latest technological trend –connected, smart products that collect data and communicate it to users – is sure to create new business models, service offerings and very importantly, brand new industries.

But as always there is a global race to get ahead.  So the Industrial Digitalisation review is about identifying policy interventions and support mechanisms that will encourage advanced manufacturing and broader industry in the UK to invest more in digital technologies and drive faster innovation, and automation of industrial processes.

At the same time there is a wider economic and societal imperative for doing this. It isn’t just about numbers, processes and investment strategies.

If we get  this right, there is a massive prize – creating a key lever and a cure for the British economy. Creating opportunities for many new and highly skilled and well paid jobs, and giving more people in our economy the chance to feel less like they are being left behind. This is of course a message we have been hearing loudly from many of our communities, especially outside of the South East.

Get it wrong and we will de-industrialise more, losing out on high-value, well paid jobs and relying on imports even more than we currently do.  If this happens, it is sure to be harder for the UK to balance its books and living standards would inevitably drop.

A lot of what we do, will be about assessing what sectors would benefit most from this approach and the technologies where the UK has the opportunity to be world class in the future. We’re ambitious but we are realistic too – we can be at the forefront of the industrial digital age, but we think it is a long term job with no quick solutions to such a complex set of issues.

We will also learn from the approaches of some of our international competitors, such as the USA and Germany. We will report in the summer and the intention is that its recommendations could form the basis of Industrial Digital Sector Deal, and create a very strong partnership between business and government. 

Regular readers of this blog or those who have heard me speak will know that I am incredibly passionate and optimistic about the UK’s ability to benefit and become world leaders in this area.  I would really welcome your feedback and ideas in the comments section below.

​Post-Brexit Industrial Strategy in action

We are 5 months on from the Brexit vote and the debate keeps rumbling on regarding the options for leaving the EU. I suspect it will not just be months, but years before we really get to understand what our trading and economic relationship with the EU will be, but I am extremely hopeful that beyond the rhetoric, we really can get a good deal that works for the EU and the UK. Only a deal that works for both will be good for our UK economy.

Whilst all this goes on, I have been extremely encouraged by the way business has pulled together post-Brexit to champion initiatives that provide us the confidence to keep investing in this prolonged period of Brexit uncertainty. Sometimes it takes a ‘crisis’ to bring people together and drive with a stronger purpose towards a common goal and for the good of the country.

An area where this is happening, is in us pulling together and working in a much more aligned partnership with Government to create a much stronger Industrial Strategy.

The UK is at a critical point in our industrial history. We have a fantastic heritage at the forefront of the Industrial Revolution in the 18th century, and now we have an equally exciting and dramatic opportunity to harness the next industrial revolution – the Digital Industrial revolution.  This will bring investment, innovation and skilled jobs back to the UK, powering the future economy. 

We saw the beginning of this exciting revolution happening in Hull today, as the Secretary of State for Business Greg Clark and myself officially opened the Siemens wind power blade factory there.

This is incredibly good news, already having created 700 new jobs and 96% of those recruited from within 30 miles of Hull.

The scale of what Siemens, and our partners ABP, have created is quite unbelievable and needs to be seen to be believed. The picture attached only gives a small flavour of the transformation. In under two years, this site has been transformed to become a modern high value manufacturing centre of excellence from a previous derelict, run-down port that expressed the sadness of the post industrial decline that we have seen so much of over recent decades. 

But, whilst this is exciting and positive, it must only be the beginning. We hope for the creation of many thousands more jobs within this industry over the next decade. We especially hope for the creation of the new digital industries that will be supporting offshore wind power: Drone technology, Robotics, Virtual Reality and even Artificial Intelligence. 

We actually have no option, because for us to continue to bring the cost down for off-shore wind energy and stay competitive we have to deploy such automation and digital technologies. The problem is that this will have an effect of reducing the amount of jobs required in the traditional manufacturing and servicing of wind turbine technology that we have only just created! That is the bad news. But as we can’t, and don’t, want to stop this from happening, we have to balance it.  We can do this by, at the same time, creating the jobs that will develop and supply the new digital technologies, the robots, the industrial drones, the software that will support the deployment of these technologies. The good news is that these will be the new, even higher value, jobs that will over time replace more traditional and repetitive production tasks.

Put simply, we have to create more of the digital enablement jobs that will replace the jobs this technology itself displaces. Unfortunately, making sure this happens won’t be easy. There is a global race to develop the technology that will power this new world of Industrial Digitalisation and we can only get more than our fair share of it, if we develop a clear strategy of how we will develop and grow this new industrial sector. This strategy should be based on: a much higher spend on R&D and innovation; creating stronger and better coordinated ecosystems for research collaboration between academics, large and small business; and, finally, a parallel strategy to develop the skills of the future.

In summary, this Industrial Digitalisation strategy is essential to creating the high tech, high value jobs that will power this new 4th Digital Industrial revolution and if we get it right, it will be the key to rebalancing the economy and raising living standards.  We need to move quickly, but that is for another day.  For now, I would  like to conclude by thanking all of our team at Hull and our Partners for their fantastic efforts in making all what has been achieved possible. 

An exciting future for UK Manufacturing inside the EU Single Market

BSE_Bus

Yesterday,  I got together with fellow CEO’s of Airbus and GKN, Paul Kahn and Nigel Stein, for a press conference, specifically on the future of UK manufacturing in relation to the EU referendum.

We represent three very strong UK manufacturing organisations, and together employ 35,000 people directly in this sector here.

We were joined by Vince Cable, Former Secretary of State for Business, Innovation and Skills, who reminded us of the importance of UK’s manufacturing sector. Our Sector is responsible for nearly half of all of UK’s exports and two thirds of all Research & Development spend of UK Business, making manufacturing Britain’s key productivity and innovation engine.

Amber Rudd MP, Secretary of State for Energy and Climate Change, also spoke: “The future of job creation in this country, which means financial security for working people and their families, requires us to be in the single market, and yet leaving the single market is sole economic policy the Leave campaign has committee to.”

All of us speaking at this event have indeed become very concerned that the Leave campaign want to leave the single market, but believe that we can ‘retain access to it’. With our combined long term experience of operating within the Single Market, we don’t think this is realistic or achievable – and we want that message to be heard – that leaving the Single Market would be damaging for our industries future.

We however kept this conference very positive, as we want to see beyond the doom, gloom and scare stories of the current debate.

We, some of the leaders of our sector, very much look forward to a future of optimism and excitement. And let me explain why that is.

There are great things happening in manufacturing with huge opportunities in exciting technologies, like driverless cars; space technology, electric propulsion on aircraft just to mention a few.

This is where the jobs, skills and growth of the future for our industry are and we want to see more of that taking place here, in the UK.

However, the regulatory frameworks and research collaborations in these areas require scale and the big players – the EU, China and USA – are leading the way.  Outside of the EU, the UK will be less influential in those discussions and we will have to play by other people’s rules if we want to sell to them.

One such example is our brand new wind turbine factory in Hull, that will produce off-shore wind turbine blades and is creating 1000 new jobs.  We and the wider industry, are very keen to use this as a catalyst to build a much bigger industry in the Humber region and beyond. New engineering and service companies as part of our supply chain, and an innovation and skills centre creating technology of the future, that will enable the region to compete on a global stage and start exporting this technology at scale. We however can’t do this alone, we will need to collaborate with other EU countries, especially Germany and Denmark.  Inside the EU this is very easily possible.  Outside much less so.

So being very clear on this, I strongly believe that being outside the EU will count against the UK when investment decisions are made and we would miss out on these fantastic, future opportunities and the jobs and economic prosperity that will go with them.

And let me also explain why being a fully paid up member and inside the single market is so important, by using some practical examples.

Early in my career, as a factory manager, I remember the days when we used to have to put a different widget on every component that we shipped: a different one to Italy, a different one to France, a different one to Germany.

Today, working with other countries, through the Single Market, the UK plays a leading role in shaping industrial standards.  This has seen us reduce the number of standards in this area from 160,000 standards down to about 19,000 today.  In many cases 28 national and often protective regulations have been replaced with a single one.  Just imagine how this has enabled factories to become more efficient and hence bringing consumer prices down.

Creating this level playing field of standards has also had a real impact on everyday lives, but we tend to forget these.

EU Regulation and standards have massively improved the environmental impact of business and consumers here in the UK.

On a more personal level,  I remember how British beer was shut out of German markets because of the restrictive beer purity laws there.  That’s no longer the case because of Single Market rules.  I recall coming to the UK from Germany in 1974, when showers were not the norm in many British homes. I wanted to install a German made power shower but that wasn’t possible due to restrictive UK plumbing regulation.  Maybe you can remember the gravity fed hot water systems that were the British Standard back then, that meant our showers were a strong dribble at best. EU harmonisation of regulations brought power showers to the UK!

These may sound a little trivial, and sometimes amusing, but there were many, many other examples of such barriers to trade that have been systematically broken down by the Single Market.  Sure, this has created a bureaucracy, as these negotiations are complex and take a long time, and sometimes the EU has got a little too carried away with high profile examples of bananas and kettles, but we don’t hear of the 80% that have created a better and fairer EU.

To be clear I’m not advertising for lots more regulation. I have become very British and quite dislike it too, but the fact is, like it or not, it is just part of grown up responsible business.

So, my position from this event is clear: being part of the EU is good for the UK economy. We see no economic upside from leaving.  The EU is not perfect, but the benefits far outweigh the costs, and the notion that we can leave the single market but retain all of its benefits is delusional.

And in conclusion, our message yesterday was a simple one:  British manufacturing is stronger in the EU’s single market.

Was the 2016 Budget enough to boost productivity and exports?


image

Clearly, with predictions of a slowdown in UK growth and potential headwinds in the international economy, this was always going to be a difficult Budget for the Chancellor. It appears that he has avoided loading significant costs or policy burdens on business and the reduction in Corporation Tax is going to get a broad welcome from business, although in practice it’s more of a headline grabber, than a significant boost to the economy.

There was some good news on infrastructure investment, particularly in the North of England (£300 million for improving transportation links there and the green light for HS3) and on Crossrail 2, which is all very positive.

And tucked in amongst the big announcements on education and academies was the launch of a welcome review of how to improve the study of maths for 16-18 year olds. Siemens has a major programme to promote STEM education, the Curiosity Project, which we are passionate about in supporting this important topic area.

Overall, however, I would have liked to have seen some more ideas on productivity and for boosting exports.

The OBR has identified our relative poor productivity performance as one of the largest drags on UK’s economy.

A single budget will of course never find a ‘silver bullet’ for such a complex issue, but an obvious opportunity missed was on business rates. Companies like Siemens had argued that in their review the government should have taken steps to exempt productivity boosting plant and machinery from rateable values, so I am disappointed not to see this happen. There were also no further steps to enhance either the UK’s capital allowance regime or R&D tax credits.

I guess we’ll have to work closer with Government to help deliver more support for innovation in its forthcoming National Innovation Plan.

And there is the work of the Productivity Leadership Group, led by Sir Charlie Mayfield, which I participate in, and will make proposals to government in the Summer

So, we still have opportunities to influence and develop policy and support mechanisms that brings all of the elements together into a more coherent Industrial Strategy. This budget alone hasn’t provided very much more concrete action in that direction.