Exports to surge in march of the makers
Ever since the financial crisis began to subside the debate has raged about how we grow our economy based on manufacturing and trade. As many companies in the West Midlands will tell you, this is nothing new and they have been quietly exporting their way around the globe way before the need to find a new economic model began.
But now, the need to export our way to growth, and not just to Europe, has taken on a new urgency. This week we published a survey, together with RBS, which looks at the extent of UK manufacturing exports to emerging markets and, the prospects for growth in the short and medium term. The results are quite striking and show that West Midlands manufacturers are stepping up their investment plans to capitalise on surging demand from emerging economies and provide a long term growth presence in overseas markets.
The extent of the presence over seas is shown by the fact nine in ten companies are already exporting and exports account for more than half the turnover of two fifths of companies. The survey also shows that 65% of companies saw their exports grow in 2011, with a fifth of companies seeing growth of more than 20%. This year 70% of firms expect exports to increase. In addition, the survey shows the extent to which emerging economies are taking over from slower growth in the Eurozone, although the EU still accounts for around half UK exports.
Ninety per cent of companies already export to developing economies and the survey shows half expect exports to emerging economies to increase this year
India and South East Asia lead the way in the immediate future with almost a third of companies expecting exports to increase in 2012, with China and the Gulf States close behind. In the next five years exports to China and India are expected to increase by 46% and 39% respectively whilst, in contrast the figure for Russia is just under a quarter.
However, the survey throws down a challenge to government to provide the framework to support this potential and increase exports to meet the Chancellor's £1trillion target. In practical terms this means between now and 2020, the UK will need to match the annual growth rate of South Korean goods and services exports of nearly 9% a year in the decade prior to the recession in 2008. West Midlands companies will do their bit to help the UK meet this target but there is no doubt it will be challenging. They key now is for business and government to work together to provide a framework of support, especially for smaller companies, that will help deliver it.
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David Bailey - Prof David Bailey, Coventry University Business School
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Richard Halstead - Midlands region director for EEF, the manufacturers organisation.
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Nick Clegg just does not realise why his manufacturing plan will never work - Whitehall is in the way
Nick Clegg’s call for government to give priority to manufacturing is a laudable and an honourable task (9.05.12). But unfortunately it will not work. The reason, government and especially ‘Whitehall’ do not listen to anyone else but themselves. In the Blair years I together with forty of the world’s leading minds that included eight Nobel Laureates advised the DTI on competitiveness, innovation (the most important commodity that we have as a country) and the founding of the NESTA. This worldwide eminent group advised in 1997 and 1998 that the UK should adopt an economic strategy based upon ‘high-tech export driven manufacturing’. Exactly I believe what Mr. Clegg is saying today, but 15 years later. Therefore I can tell Mr. Clegg from this experience that senior civil servants do not listen and just do as they wish to do; just another exercise to them but the future ramifications for the people of the UK is immense. The problem, as it will be today, is that the so-called ‘twenty something wiz-kids’ in Whitehall had not a clue up to assistant director level. They were supposingly the best from Oxford and Cambridge but what they lacked most of all was business experience and the ways of the world. Only theory came out of their heads, for that is all that they had to offer. You may ask why are these assistant directors so important? The answer is that they are the highest level ‘doers’ in Whitehall and it is their analysis and reports that ministers base their decisions ultimately upon. What did the Nobel Laureates and the other leading minds make of all this, they simply said at the end of the two years that they had been simply wasting their time, even after attempting to educate the uneducated. Therefore my advice to Mr. Clegg is to get real advisers advising government and not the Whitehall elite who think that they know best but clearly the last decade and a half has proved that they do not. Only then may he get somewhere, but if he keeps the status quo in Whitehall, it will lead him and thus the country to nowhere and probable ruin again in the long term. Our young deserve a great deal better, for these unseen senior civil servants are constantly dabbling with their futures and where they will no doubt get it so terribly wrong again. Therefore I say to Mr. Clegg, use your intelligence for a change and sort out Whitehall, for that is where a great deal of the nation’s dire problems emanate in reality. Whitehall needs ‘new blood’ like nothing else as it is our future that they will in many ways determine through government economic and business policy.
Dr David Hill
Chief Executive
World Innovation Foundation