Munduruku tribe and balanced debate

On Thursday last week our head office in the UK was the location for a colourful visit from members of the Munduruku tribe and Greenpeace protesters. The topic of protest, I recognise as an important debate and it is an active debate going on all over the world; How do countries build energy infrastructure to meet an ever higher demand of energy, at the same time making it affordable and with minimum adverse environmental and social impact. In this case the Munduruku tribe is very understandably concerned about the potential negative environmental impact hydroelectric dam projects in Brazil’s Amazon would have on their environment and community.

I was sorry not to be able to make the impromptu meeting with Chief Arnaldo Kabá Munduruku and Greenpeace, but receiving one days notice via an ‘open letter’ in the FT is an unusual way to request a meeting. Had I received a letter or an email I would have made a firm arrangement with them. Contrary to subsequent reports by Greenpeace, two of my senior leadership team were able to change their schedules and were on standby to welcome the visitors. The Chief was an eloquent ambassador for his people and the meeting was conducted on all sides in a very constructive, open and respectful manner.

Firstly, let me make clear that I personally and at Siemens, we very much share the same values of environmental protection and care for communities as Greenpeace and it was good that in their meeting with us they recognized and confirmed that. Sustainability is core to Siemens culture and we have been top of the Dow Jones sustainability index since its inception.

Secondly, let me also be clear that Siemens is not involved in any hydroelectric power projects in Brazil. In fact, our information is that the mega dam project in question was recently cancelled by the Brazilian Government.
For any major infrastructure project, it is always a complex balance between matching human needs for things like access to electricity, more travel and higher energy consumption with the need to protect unique habitat and prevent further pollution of our planet.

So, these difficult issues need objective debate supported by facts and scientific evidence of all the options available, enabling Governments to consult with their communities and choose the solution that matches the needs the best and causes the least harm. Unfortunately, I have never seen a major infrastructure project that matches all criteria and everyone’s wishes.

Regarding this Greenpeace organised visit I’m afraid, I have to question both the process and balance. What was the real intention of bringing this debate to Siemens in the UK? Of course we will have all identified with the potential risk and felt emotionally touched by the Munduruku tribe and their fear of being displaced. But do we now have a clear view of what the other options are? Would these create even more social displacement or negative environmental impact? Was there enough objective evidence from all sides?

We seem to be living in a new world of fast and social media that is mainly focused on sensational headlines and with complex and emotional issues like this debate we need it to be much more thoughtful, rational and fact based.

I’m personally very concerned by this trend and that we are allowing less space for experts views and balanced debate. Michael Gove’s now famous quote during his Brexit campaign of ‘Britain has had enough of experts’ a damning example of that.

I will certainly continue to listen to experts from all sides of any debate. On this particular one, I thank Greenpeace for providing me their view, but I will not be bullied into a position through headline grabbing campaigns at very short notice. If they’d like to meet me in the future – do just contact me in the normal way!

An exciting future for UK Manufacturing inside the EU Single Market

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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.

The truth about the EU Single Market

Communicating effectively about our EU membership is hard. It is a very complex issue, as a slight storm on my twitter account regarding the Single Market v. Free Trade Agreements (FTA’s) yesterday revealed.

I’d like to pick this issue up in more detail, which I feel is being misrepresented in this Brexit debate. The truth is that a Canada,  Albania or any other type of Free Trade Agreement is considerably inferior to the EU Single Market we are a member of. The Brexit campaign has now loudly expressed their wish to leave the latter, but has given no explanation of the risks this represents to our economy.

Allow me to explain the difference between an FTA and the Single Market using a very practical, but real example.

I came to the UK with my family from Germany in 1974. One year after the UK joined the EU and therefore the European Economic Community. Prior to this the UK, like most European and Global markets had worked to protect their markets through import tariffs and protective regulation. So there was no single market and no or very limited free trade between the UK and Europe.

We wanted to import the car we had owned in Germany, a lovely and reliable Opel Kadett. It however made no financial sense, because the import tariffs and numerous technical changes that would have needed to be made to the vehicle, would have cost more than the value of the vehicle itself. Our next option was to buy an Opel Kadett ready imported by the manufacturer to the UK. This however would also have over stretched our budget, because Opel had to pay import tariffs and the cost of carrying out all the technical modifications in their factory before exporting. So instead, we had no choice, like most British people at that time and bought a Morris Marina. As anyone who owned one of these will no doubt confirm, it was one of the worst examples of British design and innovation to come out of UK’s 1970’s industrial decline. I can remember more journeys in which the car broke down than making it without trouble to our destination. Certainly not the Opel we were used to!

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Introducing an FTA would have removed the import tariffs on the more reliable Opel we wanted. However the much larger cost both physically and from an administration point of view were the numerous required technical changes. And it is only the Single Market that can and has removed these ‘non-tariff trade barriers’. Put simply, an FTA alone, would not have allowed us import or buy the car we wanted in the UK. But the Single Market would have made that difference and today provides for that greater consumer choice at better prices.

The EU single market has successfully harmonised such regulations across the entire EU for automotive and numerous other industries. And it is still being worked on now, like the harmonisation of EU mobile phone charges recently demonstrated very visibly. Now, carrying out this harmonisation is very complex and takes a long time. Every nation naturally wanting to influence to ensure their own standards remain. But when achieved, we have the situation we largely have today. A Renault made in France is as accessible to the UK consumer as is a Toyota made in the UK. It is even now possible to buy British brewed beer in Germany that for a long time protective laws in Germany prevented. And the value for money, technology and innovation has massively improved for all in the EU, as opening, smartly regulating and standardising markets always does. Doubters at the beginning of creating this single market, were concerned it would mean the end of the last of British engineering industry. The truth is that the previous closed and protected market was killing the industry and the decline would have continued at pace, had we not joined the single market. Today, the UK’s automotive Industry can hold its head up high and we are exporting more cars than ever before – the EU and single market having been the enabler and not the barrier for this. An FTA with EU markets alone would not have achieved that.

It is true that sometimes EU regulators got carried away, we’ve all heard stories about bananas and cucumbers, and we must work to stop such nonsense, but to use those high profile yet minor issues and ignore the vast progress made over decades in breaking down thousands of protective practices, is plain irresponsible. And that is what leaving the single market would mean and no FTA can replace that.

In summary, when we are told that we can leave the Single Market but still have access and all the benefits of it, that is not true, as we would have no influence on the harmonisation of the market and we would increasingly be confronted with the non-tariff barriers as I describe above. And then there is another key reason I have not yet covered, which is that FTA’s provide no or very limited access to free trade of services. That is so for Albania’s and Canada’s FTA with the EU and even Switzerland’s very advanced deal under EFTA provides for no free trade on financial services.

The Brexit campaign arguments to leave the Single Market, simply do not stack up economically.