Lord Sainsbury of Turville

MARINE SOUTH WEST CONFERENCE

I want to talk today about marine technology and innovation. But I would first like to explain why the Government is taking innovation so seriously and what we are doing to help ensure that innovation plays its part in driving Britain forwards to meet the new challenges of the global economy.

There are two fundamental reasons why innovation is so important today.

The first is globalisation. Trade liberalisation and a rapid fall in communication and transport costs mean that the UK has increasingly to compete against countries with significantly lower labour costs and well-educated labour forces. Wages today in China are less than 5% of those in the UK, and hourly labour costs in South Korea are just over half UK levels, but the proportion of graduates in the working age population is almost identical.

The second is that technology and scientific understanding are changing our world faster than ever before. Developments in information technology, new materials, biotechnology, new fuels and nanotechnology are generating new waves of innovation and creating many opportunities for entrepreneurial businesses to gain competitive advantage.

So on the one hand we have the challenge that has come from the emerging economies and on the other, the opportunities created by new developments in science and technology.

In this country we have some very innovative industries: we have the world's second largest pharmaceutical and bioscience industries and we have great strength in the creative industries, aerospace, and financial services industries - which account for a higher proportion of our national wealth than anywhere else in the world. But at the national level our innovation performance is no better than average.

If the UK is to succeed in the global knowledge economy, we must compete in the high value-added areas building upon a knowledge economy, high in skills and embracing innovation, science and technology. This is why the DTI published, in December 2003, the Innovation Report, ‘Competing in the Global Economy: the Innovation Challenge’. This set out an action plan to increase the level of innovation in the UK economy. This included a Technology Strategy to provide a business-driven framework for identifying emerging technologies and which will help to exploit our strong UK science base and ease the transition of ideas from the laboratory to the marketplace.

So how does the marine sector fit into this approach? The Government fully believes both that the sector is an important one and that R&D and innovation have a key role to play in its future success.

In the NE and NW they have found that meeting with the Performance Car Manufacturers worked out well as discussions benefited both industries with manufacturing. There were benefits in composites materials and the supply chain. This was creative engineering and there were lessons for the Leisure Marine industry to take on board.

While the UK marine sector has been innovative and a strong utiliser of technology, there has been no national technology strategy to date. Links between industry and universities have been strong in some areas but non-existent in others, which has created a fragmented approach to projects.

In the light of this the DTI hosted in May a one-day Marine Technology Future Focus event, the first of its kind. This brought together technology and business experts, both academic and industrial, with the aim of generating ideas and themes for a Marine Sector Technology Plan.

I am pleased to tell you that an agreed Technology Plan for the sector is now up and ready. It clearly identifies the sector’s key technology and R&D requirements and aims to stimulate and take forward collaboration for R&D projects, not just between the various marine sectors but also between marine and other industries which have common technology themes. Sectors such as aerospace, automotive and construction have much to offer, for example in the areas of electronics, sensors and composite materials.

The Technology Plan will build on the work of the National Composites Network. This is a £30 million project which the Government launched last November to develop a strong and thriving composite materials capability in the UK. It brings together major developers and users of composites technology in the marine, aerospace, automotive and construction sectors.

With national government and EU technology now concentrated on a collaborative, cross-sectoral basis, the clear set of technology and R&D priorities that the Marine Technology Plan sets out will be of great advantage when approaching funding providers. The major funding sources are the DTI Technology Programme and the EU Framework programmes.

Technology and innovation is a key work strand of the Shipbuilding and Marine Industries Forum, which the Government established in 1998 to improve the productivity and competitiveness of the industry. The DTI will continue to work closely with the marine sector in taking this work forward and ensure that the sector benefits from the appropriate funding streams.

Work is also underway to produce by the end of this year a maritime Strategic Research Agenda under the EU Waterborne Technology Platform. The objective of this initiative is to improve the long-term competitiveness of the European maritime industry through the application of research and innovation. The initiative should provide significant opportunities for UK research teams in successive EU Framework programmes.

I would like to say a few words now about the UK marine sector. It is not widely recognised just how major a role the sector plays, both in the national economy and that of the South West. It contributes almost £2 billion to GDP and employs some 45,000 directly. It is very diverse, ranging from leisure boat building, marine equipment manufacture, ship repair and conversion, commercial and naval shipbuilding and the maintenance of the Royal Navy’s nuclear submarine fleet.

Growth prospects are good. Leisure boats are showing strong growth, especially in the yacht and “superyacht” sectors. Exhibitors at last month’s Southampton Boat Show reported excellent order levels, which some described as “record breaking”. We have a number of world-class manufacturers of marine equipment whose export performance is also strong. Ship repair is a growth sector and we have the second highest turnover, after Germany, in Europe.

I am aware of the importance and diversity of the marine sector in the SW region. Major firms include: boat builders Princess, Sunseeker and Pendennis; equipment manufacturers Rolls Royce and Hamworthy; ship repairers A&P; and DML, which undertakes nuclear submarine maintenance. A fifth of UK boatbuilding companies are located in the SW, accounting for a third of employees in this sector and DML is the largest private sector employer in Devon and Cornwall. Over a quarter of the UK shipbuilding and repair workforce is located in the region.

I am also aware of the region’s strengths in marine sciences. Plymouth has long been a focus for world-class marine science and technology thanks to the presence of the Plymouth Marine Laboratory, the Marine Biological Association, the Sir Alistair Hardy Foundation for Ocean Sciences, the National Marine Aquarium and the University of Plymouth. This cluster of marine science and technology expertise is one of the largest in Europe and its importance to the local economy has been identified in the city’s Growth Strategy.

I recognise that while investment in R&D and innovation is essential to the future success of the marine sector, the improvement of the sector’s skills base is also crucial. The DTI is working closely with SEMTA, the sector skills council, to ensure the availability and deployment of adequate skilled people for the industry.

SEMTA will shortly be launching a Marine Sector Skills Agreement, designed to deliver specific actions to meet the industry’s skills and training needs. The Treasury are providing £0.5m towards its implementation. Initial activity will focus on management and leadership, which industry has agreed is the top priority. Nevertheless, it is recognised that skills shortages of designers and technicians acts as a barrier to technology innovation and this will be addressed under the Agreement.

I would like to take this opportunity to thank Mike Leece, who chairs the Marine Sector Strategy Group for Skills, for his excellent work in taking this ground breaking work forward.

Following the decentralisation of business support to the Regional Development Agencies and the Enterprise Agencies, those organisations and their delivery agents all have a major role to play in improving the competitiveness of the marine sector. We have in the South West Regional Development Agency (SWRDA) and Marine South West two excellent champions of the sector.

Adam Corney, Marine South West, will update you on the work that is being undertaken by his organisation so I will keep my comments here very brief. I am pleased that Marine South West are to continue to give priority in their next business plan to technology & innovation and to skills & training. And I am much encouraged by the network of marine skills centres that Marine South West are opening across the region - at Poole, Falmouth and Plymouth - which will train some 1,500 people each year.

SWRDA has already approved funding of £2.6 million in support of the sector with a further £1.3 million under consideration. This demonstrates our commitment to improving the competitiveness of the marine sector in the South West. As further evidence of support for the sector, SWRDA is also providing funding towards an in-depth DTI Sector Competitiveness Analysis for the leisure boatbuilding sector. The study is expected to be completed shortly.

Towards the beginning of last year DTI officials established a forum to develop dialogue with the Regional Development Agencies, including SWRDA, to ensure effective and coherent support for the marine sector at regional level. We will continue to ensure that the marine sector is adequately reflected in the economic development strategies of the participating English regions and Devolved Administrations.

I believe that technology and innovation have a key role to play in the future success of the UK marine sector. I also believe that the Government’s Marine Technology Plan provides an excellent platform from which to take forward the priorities identified for the industry, and the Government will continue to give this initiative its fullest support.