It's exactly a year ago that BMW announced that its intended sale of Rover and the potential closure of Longbridge.
Today I want to look at the lessons learned from Longbridge. About the importance of manufacturing and of an active industrial and regional policy. And to announce new measures for the car industry and a major package of support to strengthen the West Midlands economy.
One year on, it's useful to take stock of where we are at Longbridge. And what could have been.
One year ago people were predicting meltdown at Longbridge.
There were forecasts that the Alchemy bid could cut Rover's workforce to as low as 1,500, with production cut from 230,000 to as few as 50,000.
We faced the threat of closure of the Longbridge plant, with the loss of 9,000 direct jobs and 15,000 jobs in the supply chain and the wider economy.
The day after BMW's announcement, I came to Longbridge. I met the workforce, the unions and the management.
Understandably there was a sense of anger. Of frustration. And of helplessness.
The decisions taken by BMW in relation to Rover showed that in a time of globalisation we face two choices - a choice between uncontrolled change, forced by the markets and commercial pressures. Or a process of economic reform that delivers economic efficiency and social justice in which people and their communities can be genuine partners in change and not the innocent victims of change.
I was always clear. A Labour Government will always back the second option.
Some said there was no role for government. We should stand to one side. Do nothing, leave everything to the market.
But there were 24,000 good reasons why we didn't turn away. And that was the 24,000 jobs at stake.
That is why we brought together John Towers and his Phoenix consortium with BMW. That is why, the day after BMW announced its decision to sell Longbridge, I set up a Task Force, involving all the partners concerned with regenerating the areas most affected.
As a result of the decisions taken, and the hard work of many people in this region, the situation is very different one year on.
There are still 7,500 people employed at Longbridge - 5,500 at MG Rover and a further 2,000 at Longbridge Powertrain.
There have been job losses at Longbridge - around 1,500 overall. The huge majority have been voluntary and the Employment Service has been on hand to help with retraining and finding new work.
At the same time, the Task Force and local partners have helped to secure new investment to the region. Including Marconi's decision last year to build a new communications headquarters in the West Midlands, creating 2,200 new jobs.
There is now an air of optimism at Longbridge.
MG Rover have achieved sales of 203,000 in the last year - beating its target of 200,000. Achieved despite disruption caused by the sale, the associated negative publicity, and the move of Rover 75 production from Cowley to Longbridge.
And at the Geneva motorshow recently we saw new MG Rover products which will increase production: the launch of the Rover 75 estate and three new MG models.
I don't think even the most optimistic among us would have predicted this one year ago.
This is a tribute to the work of John Towers and the Phoenix Consortium. To local MPs like Richard Burden. And above all to the resilience and commitment of the Longbridge workforce and the local community.
A year ago some commentators claimed that the situation at Longbridge showed that manufacturing was no longer important for the UK economy.
I have always rejected that view.
A strong manufacturing sector is a vital and integral part of the economy.
It accounts for about a fifth of our national income with almost £150 billion of output per year.
Manufacturing employs around 4 million people directly and indirectly it employs two and half million in service sector jobs.
Increasingly, manufacturing involves complex processes to make high value added products, which are a source of sustained competitive advantage
Advances in manufacturing - whether new goods or new processes - can lead to productivity improvements across the whole economy.
It includes some of our most innovative businesses investing heavily in research and development.
Just look at aerospace, where employment has increased by a fifth - nearly fourteen thousand extra jobs - between 1998 and 2000.
We're seeing significant investment in other sectors too. Including cars, where last month there were announcements of new investment of £240 million by Ford at Bridgend and £200 million by General Motors at Ellesmere Port. Coming on the heels of the earlier announcements by Nissan and Toyota, this is further evidence that the UK remains a good place for the car industry to locate.
The AEEU and its members have, of course, made an important contribution to this success - which reflects the flexibility and skills of our workforce and a big improvement in productivity.
In the UK we have world class companies, plants and workers. We are world leaders in some sectors.
But we do need to do better. To extend manufacturing excellence. To raise productivity, innovation, and skills in all sectors.
And we all know that some industries are facing real pressures.
Global markets and the introduction of new technology mean that this is a period of major business change and restructuring.
All sectors have to adapt to compete in the future.
Change for business is nothing new but the pace of change can be threatening for industry and people.
As an active, enabling Government our task is to equip people to adapt to change, to help open up new opportunities for business and enable established industries to modernise.
The need for this new approach to industrial policy was clear in relation to Longbridge last year. It was clear that we had to move beyond the dogmatic distinctions that were made in the past.
When government was either interventionist - dictating to businesses and often standing in the way of growth and prosperity - or simply relied on market forces and a laissez-faire approach which didn't serve the national interest.
The plain truth is that businesses should run business.
But there are steps that governments can take to help create an environment that allows business to prosper, that give people the opportunity to realise their full potential.
In this world of great complexity and rapid change, we need an active industrial policy. Based on innovation, enterprise and skills, on maximising the potential of all parts of Britain and on exploiting the talents of all our people.
First and foremost industry needs economic stability.
For years we have had violent swings of the economic cycle.
Ten years ago inflation was over 8%. Interest rates were over 13%.
One million manufacturing jobs were lost in the early 1990s.
This Government will not return to those days.
Almost four years ago now, we reformed the whole basis of economic policy-making.
We took tough decisions early on to make the Bank of England independent, to put in place a proper fiscal framework, and to pay back the national debt.
As a result, inflation is the lowest for decades, and is the lowest in Europe. Long-term UK interest rates are around their lowest levels for over 35 years, converging with those of Germany.
I fully recognise the concerns of some sectors of manufacturing about the sterling-euro exchange rate.
Some have argued that joining the single currency would end all our difficulties.
Our policy is clear.
We remain committed to joining a successful single currency in principle. In practice the five economic tests must be met.
As the Chancellor said in October 1997 "the potential benefits are obvious - in terms of trade, transparency of costs and currency stability."
So in principle we would join but the economic conditions have to be right because this is essential to membership being in the national interest. Only then would we make a recommendation to the British people to join.
We are committed early in the next Parliament to assess whether or not these tests have been met. If they have been met then the final decision will be for the British people in a referendum.
That is our policy - it has not been changed and will not change.
It is a policy which is understood by business. It is clear to me that had we ruled out joining then investment decisions which have recently been made would not have been taken in favour of the United Kingdom.
The economic stability we have achieved now gives us a once in a generation opportunity. To build for the future on firm foundations. To establish lasting economic success.
As we cut the costs of economic failure - cutting public debt, reducing unemployment, and with low inflation - we are freeing up the finance necessary to invest in the infrastructure and high quality public services that our country so badly needs.
This means that, without risking our hard won stability, we are now investing in reforms to promote innovation and entrepreneurship and support dynamic manufacturing industry.
To be successful in this fast moving, dynamic economy, companies must innovate. Not just in products but processes, marketing and management.
We can not try to compete on labour costs and raw materials alone. We succeed when we add value to our products.
Employers and workers, together with their unions, need to work together to tackle these issues.
But Government also has a key role to play. A role which this Government takes very seriously.
That's why we will drive forward an active industrial policy.
To extend manufacturing excellence - investing in skills, making the most of new technology, supporting industries of the future, raising innovation in every region.
An industrial policy based on three clear steps.
First, putting in place the building blocks for the future.
We are boosting investment in UK science to ensure we remain at the cutting edge of research and that the science base is linked to industry. Over the next three years we are putting over £1 billion into science - on top of the £1.4 billion we have already invested.
We are investing in skills and training to ensure that the skills of our workforce meet the future needs of industry.
And we are investing £180 billion in the transport infrastructure industry needs to move goods quickly, efficiently and cleanly.
Second, we are creating a modern regulatory framework that drives innovation and encourages growth and increased productivity.
That means promoting competition, which provides a spur for firms to increase productivity.
And providing incentives for the sustained investment we need to improve productivity in manufacturing.
Enhanced capital allowances since 1997 and new tax credits to encourage investment and innovation have already saved business over £1 billion with a third of a billion pounds being saved by manufacturing.
In last week's Budget the Chancellor announced that we are now seeking views on a new tax credit aimed at boosting R&D and innovation in larger companies - particularly manufacturing businesses. This new credit is designed to complement the R&D tax credit for small companies introduced in April 2000.
And third, we are improving support for business. Providing world class, forward-looking business support for manufacturers to expand at home and overseas.
That's why my Department is working with a wide range of industry sectors to see how they can take advantage of the opportunities of e-commerce. To ensure that UK industry can reap the potential benefits of technological developments.
In sectors like aerospace, oil and gas, metals and chemicals we are supporting industry forum adaptation programmes, to enable industry to adopt best practice in production and supply chain management.
And in the car industry where today I can announce a major package of measures to help the industry modernise and compete.
We are providing £15 million towards the Foresight Vehicle Mobility programme, helping the industry develop safer, cleaner cars. And we are supporting a new industry initiative to set up a supply chain database to strengthen links between the car assembly and component supply parts of the sector.
These initiatives will help the industry to improve its competitive position and meet the challenges of the future. But in order to meet the challenges of the future, we need to do more.
That's why I am setting up a new industry led group to look at how, over the medium term, the vehicle industry's competitiveness will be improved.
Its job will be to come up with practical actions, not lots of analysis, and report to me in 6 months, not longer. Industry representatives and Government officials will work together on medium and long-term issues to actively promote more innovation and higher productivity in the car industry.
As we saw in relation to Longbridge, manufacturing is a regional issue. Its economic significance is greater in some regions than others. Some regions are still heavily dependent on particular industries or companies.
Manufacturing is less than 12% of GDP in London and around 16 per cent in the South East.
In contrast, here in the West Midlands manufacturing makes up over 29 per cent of the region's GDP. It represents 28% of regional GDP in the North East. And over 26 percent in the North West and Yorkshire and the Humber.
It is these regions which have the highest concentration of established industries. Industries which are facing the greatest restructuring. Which have the greatest need of modernisation and help in adapting to change.
As I announced at an AEEU seminar earlier this year, we are giving Regional Development Agencies in these regions additional funding to support innovation and enterprise.
Last week the Chancellor and Deputy Prime Minister announced challenging new targets for RDAs, including targets to raise productivity in their region and increase business innovation. And as from next year RDAs will have new flexibility to decide their own budget priorities to deliver these new targets.
Last month David Blunkett and I published a White Paper on enterprise, skills and innovation, in which we set out further measures to build regional capabilities - investing in skills, making the most of new technology, supporting industries of the future, raising innovation in every region.
Research and development is one of the key building blocks for business innovation and success. Yet there are significant variations in the levels of R&D across the country.
In 1997, investment by manufacturing business in R&D represented 9 per cent of gross value added in the South East, compared with around 2 per cent in Yorkshire and the Humber and the North East and just over 3 per cent in the West Midlands.
To help tackle this, in addition to the R&D tax credits I mentioned earlier, we will establish new University Innovation Centres to enable universities and businesses to collaborate on large scale research and development and boost levels of innovation and technology transfer. The first five involve companies such as BAe, Proctor & Gamble and Hewlett Packard.
And a network of Technology Institutes will provide advanced learning in IT and new technology, ensuring that people have the skills they need for the jobs of the future.
These initiatives will strengthen collaboration on cutting edge technology between universities and manufacturing industry.
But we need to be concerned not only with those industries at the leading edge.
We must also help more established industries to modernise and adapt to a changing world.
I announced last year that in each region we will establish a Manufacturing Centre of Excellence to respond to the needs of smaller manufacturing firms.
We will now build on that proposal to establish a new Manufacturing Advisory Service, providing practical, "hands on" help for smaller manufacturing firms who want to introduce world class manufacturing practices and technologies.
Here in the West Midlands we are complementing these initiatives with a package of measures, including proposals from the Rover Task Force, to modernise, diversify and regenerate the region?s economy.
I would first like to thank the Task Force members for all the good work they have done, especially Alex Stephenson and Advantage West Midlands who have led the Task force.
Last year I pledged £129 million to support good quality projects in the region, in the wake of BMW's decision to sell Rover.
Today I am announcing details of a £60 million package to support the main proposals from the Rover Task Force, which is the final part of this commitment.
Last year I said that we would support economic regeneration and job creation in the region. That's what this package is all about.
We will provide funding to set up a new regional automotive centre, providing a single location for the SMMT Industry Forum, and a showcase for West Midlands schools to encourage careers in engineering.
We are providing funds to boost apprenticeships in the region, and provide opportunities for those already working in the automotive industry to learn new skills.
Projects will also include schemes to encourage and assist businesses to research new market opportunities, develop new products, exploit new technology, and improve efficiency.
In addition, a number of projects are now being planned to support the potential development of three high-tech corridors in the region.
All these actions are aimed at modernising the automotive sector, and diversifying the economic base of the region, so that it can compete successfully with a world class workforce, and is not too reliant on one industry or a single employer
We need to build on the strengths and diversity of the West Midlands economy if we are to establish lasting economic success in the region.
This package of measures is designed to do exactly that.
We will help industry to adapt to change. To encourage the new industries of the future. And to help established industries modernise and compete in new markets.
Manufacturing matters to our country. Once the cradle of the industrial revolution, we can now be at the heart of the knowledge economy of the 21st century.
Across manufacturing, I believe that government, industry and trade unions learning from each other can meet the great challenge of change.
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