Jacqui Smith MP

Manufacturing in the West Midlands

I am delighted to have the opportunity to meet all of you today. It is particularly valuable for me to meet you in an early stage in my new role and Minister for both Industry and the Regions. I am keen to hear at first hand about the issues you highlight today. And I am very pleased to see my fellow Midlands MPs here today to lend their support.

I know that all of us here today are agreed on the importance of manufacturing. Manufacturing makes a larger contribution to the regional economy in the West Midlands than in any other region. The Black Country is of course a key focus for manufacturing in the West Midlands - impact throughout region including my constituency.

As a Government, we are clear that manufacturing is absolutely central to our future as a high technology, high value successful economy. To continue as a leading economy, we must have a world-class manufacturing sector.

It is important that we publicise the manufacturing sector, and its successes. Some of the most exciting activities in this country are happening in the manufacturing sector.
[Earlier this month the Prime Minister visited Airbus at Broughton to see the plant that manufactures the wings for the company's various aircraft. These are transported from Wales to final assembly lines in Toulouse. At the recent Paris Air show - which I attended on my first day in my new role - Airbus announced it has struck three major new deals for its A380 Programme. Airbus expects to deliver around 300 new aircraft to customers during the current year]

This kind of success is not always recognised in the press. That is why I am particularly pleased that the Black Chamber has established its campaign to raise the profile of manufacturing.

Whilst celebrating success, we also recognise that manufacturing is going through a difficult time- with world trade growth still weak, but global competition fierce and manufacturing output flat.

It is difficult to do much about these short-term but intense pressures. Though maintaining the macro-economic stability we have established is vital. It would be disastrous if interest rates and inflation went back to previous levels. We must give UK manufacturing the best base to respond to any upturn in world demand and opportunities.

But we are determined to change the long-term position of manufacturing.

That is why we published the Government's Manufacturing Strategy in May last year.

There was a clear consensus amongst the partners brought together to frame the strategy. The aim of is clear. We cannot compete on the basis of low cost, low skill, low margin goods. We are utterly vulnerable to competition from low cost economies. Our response must be innovation. Higher value added products. Faster and better production processes. A virtuous circle of investment, skills and innovation.

We are taking practical steps to help more manufacturers to do this. You are closely familiar and involved with them. We have made considerable progress against all of the seven pillars set out in the Manufacturing Strategy.

First and foremost, the Manufacturing Advisory Service. I am very pleased to see members of the West Midlands Manufacturing Advisory Service, here today.

I understand that this reception today originates from a visit Sylvia Heal [MP for Halesowen and Rowley Regis] made to the Manufacturing Advisory Service. She was particularly impressed with the work that you are undertaking and the services that you provide.

The MAS West Midlands has seen a rapid growth since becoming operation last September. I know you have made around 500 diagnostic visits and provided a similar number of in depth consultancies. Ensuring that manufacturers in your region benefit from advice based on real knowledge and know-how.

On average, firms across the country record an increase in added value of over £85,000 a year as a direct result of this service, with improvements in stock turnover of 90 per cent, and scrap or waste reduction of 37 per cent.

There is also concrete action on the other pillars identified in the strategy. For example, and reflecting the importance of the automotive sector to the W Midlands, on 23 June, Patricia Hewitt announced the new Automotive Academy to be fully launched in the Autumn - one of the main recommendations of the Automotive Innovation and Growth Team. The Academy, which will be situated in the West Midlands, will help the whole of the UK to achieve the highest levels of training and development for the automotive industry. Particularly for the supply chain - having an impact deep into the West Midlands.

We also continue to help the automotive industry supply chain in the West Midlands to modernise and diversify with the help of the Rover Task Force funding which was made following the Rover crisis'

We need to compete on the basis of innovation and development.

Innovation Review in the Autumn.

Already investing strongly in science because of its importance as a driver of new products and new processes in manufacturing. The UK science budget is increasing at 7 per cent. per annum in real terms and, as a result of the 2002 spending review, it will increase at 10 per cent. per annum in real terms over the next three years.

And already we are seeing the results for industry with the number of spin-off businesses from UK universities up by 22%, and the number of patents filed by Higher Education Institutes up by 26%.

We have further extended the Research and Development tax credit to all companies, which will overwhelmingly benefit manufacturers. As a result, the UK is among the best in the G7 in terms of tax support for research and development as a percentage of GDP.

Another key plank for the Man Strategy is the development of the skills of our workforce.
Earlier this month on 9 July, Charles Clarke and Patricia Hewitt launched the new Skills Strategy, which will help manufacturing for example by rapidly expanding the Sector Skills Council network, and strengthening Modern Apprenticeships. A new partnership of Government, CBI, TUC, Small Business Service, and key delivery partners will be brought together in a 'Skills Alliance' to put the UK firmly on track to the high skills economy we need.

My job combines both responsibility for manufacturing and for promoting equality and diversity. There are very clear links. I know that you've had presentations on equality and diversity from some of my officials earlier today, as well as on our manufacturing work. Let me say, from my perspective, any business or economy that fails to use the talents of all its people is failing. Only the week before last we announced a pilot project in the West Midlands to assist black and ethnic owned businesses to win government contracts by simplifying the mechanisms by which small to medium sized businesses find out about and bid for government work, streamlining the procurement processes to provide a simpler and more cost-effective approach and setting up of a Regional Supplier Development forum.

These are just examples of what we are doing in partnership with our key partners like yourselves and others in the West Midlands and across the country. I hope that they show our determination to make real progress to do what we can to ensure a strong future for our key manufacturing industries. I look forward to hearing your views today. I want to know what this Government can do to help your business succeed in these difficult times.