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The Rt. Hon. Patricia Hewitt, Secretary of State for Trade and Industry, Cabinet Minister for Women

TUC Manufacturing Conference

The Rt. Hon. Patricia Hewitt

Congress House, London

Thursday 15 July 

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Brendan, thank you for inviting me here today and giving me the opportunity to talk about what I believe to be one of the most important priorities for government, unions and industry.

And, despite what is sometimes written in the media, I believe that we share a common vision for manufacturing in our country.

We all want a successful manufacturing sector producing value-added products and well-paid, highly skilled jobs. You and I know that the best of British manufacturing is, and always has been, the best in the world and that's why it has a future.

British manufacturing doesn't 'live on thin air' it:

accounts for a sixth of our national output;
contributes over 150 billion to the economy;
employs 3.5 million people; and it
supports 2.4 million service sector jobs.

Since I have been Secretary of State, I have made clear that 'manufacturing matters'. I have actively driven a pro-Manufacturing approach in my department and within Government.

That's why I published the first manufacturing strategy for over 30 years after close consultation with both industry and unions. The strategy is not a passive document. It sets out clear approach and argues that Government, Industry and Unions all have the responsibility to help improve the sector.

Industry - committing to skills development, to investment and best practice;
and Unions - helping to develop high performance workplaces and better skills for the workforce and your members.

Because this is the only way we are going to help British manufacturing compete in a challenging global economy.

Look at China - the world's largest population is set to become the world's largest economy - now producing four times as many graduates as a decade ago;

or India - three million graduates a year - literate, skilled, productive and with comparatively low wages, yet huge purchasing power;

and the new Central and Eastern European Member States of the EU - many with wages a fraction of ours - now in the single market.

We are never going to be compete on cost alone - and nor should we try to. Our response must be innovation - using faster, cleaner processes to offer high value products and services that the world wants to buy.

In government there is a lot we can do to help promote innovation. At the DTI - and I must say rumours of our demise have been much exaggerated - it is our top priority.

We are the Department of Trade and Industry, but I see my department as much as the Department for Trade and Innovation - because innovation policy is part and parcel of our industrial policy.

We no longer accept the approach that says 'invest first, innovate later' - because it doesn't work. Not for the companies who ended up going to the wall, or the workers who lost their jobs because the business was uncompetitive.

Instead we invest in innovation - to help create the new manufacturing companies of the future.

Like the National Metals Technology Centre in South Yorkshire - funded by a 3million DTI/RDA grant, working with our universities to ensure that 'Made in Sheffield' has the same resonance in the 21st century as it had in the last.

Or the Institute of Bioinformatics in Durham, again funded with a 4million DTI/RDA grant, bringing the best research, clinical and engineering expertise together to create the new wonder drugs of the future.

Great examples of investment in innovation. But this is not the whole picture. We do have world-beating companies in the UK, but we also have too few of them. So we are working hard to spread the success of the best to the rest.

We've more than doubled the Science Budget since 1997 to 3.3 billion by 2007/8. And we've increased resources for knowledge and technology transfer, so that manufacturers can capitalise on it.

We've extended the R&D tax credit regime, which is already providing 600m of assistance, so that more manufacturing companies benefit from it.

Just this week the DTI received 205m to drive forward our Technology strategy. This will be of huge benefit to manufacturing companies - aerospace, automotive and IGTs are all set to benefit from this investment.

And the spending round has secured 12million to the hugely successful Manufacturing Advisory Service - a programme that has boosted manufacturing by more than 53million, delivering an average 100,000 added value to every manufacturer that goes through the full programme.

I also recognise - as Brendan, and others have said today - the impact public procurement can have in driving innovation through our manufacturing sector.

Government has a key role to play through the goods and services it procures, in driving innovation and growth in manufacturing. I believe that public procurement in the UK is rightly underpinned by principles of fair and open competition - protectionism would not be in the long-term interests of either the manufacturing sector or the British taxpayer.

But, I recognise that we must do more to give UK based manufacturers the support and information needed to compete more effectively for Government contracts both at home and abroad.

We are making progress here too. Together with the Secretary of State for Defence we have established a coherent Defence Industrial Strategy for the first time. A strategy that acknowledges the positive impact major defence projects can have both on the UK's economy and manufacturing jobs.

This is, of course, just the beginning. The action plan we're setting out today ensures we keep up the momentum. I'm delighted that Kevin Smith of GKN and Jacqui Smith, Minister for Industry will jointly chair a Manufacturing Forum, working with unions and others to take the plan forward and monitor it's delivery.

We recognise the huge restructuring that has taken place in UK manufacturing in the last few decades. I am not blind to the loss of traditional manufacturing jobs. I know the pain and uncertainty caused to workers, their families and communities because I've seen them first hand in my own constituency in Leicester, once the centre of Britain's textile and clothing industry.

But my real concern is that, while we understand the pain of those who have lost their jobs, we risk putting off new recruits in the sector by talking down it's prospects for the future.

Contrary to the popular myth that there are no jobs left in UK manufacturing - the reality is that - according to figures published yesterday - there are nearly 64,000 vacancies in the sector.

That's 64,000 jobs that need filling today with skilled, enthusiastic people. But what chance do we have of filling these - of recruiting the engineers and technicians of the future - if all young people ever hear is 'doom and gloom' about the sector?

Yes, in a global economy the sector faces challenges, but the fact is new jobs in manufacturing are being created all the time. Around 250,000 manufacturing vacancies were reported to Jobcentre Plus in the last year alone. So let's not talk the sector down, British manufacturing has a good story to tell and there are good jobs that need filling.

We need to get more people into manufacturing jobs, which is why I can say today that Charles Clarke and I want to work more closely with the unions, business and other stakeholders, to ensure there is a steady stream of people emerging from our educational institutions with the right skills needed for a career in modern manufacturing.

To do this, I believe we need to actively promote a positive image of the sector in schools, both to children and teachers.

We need to look at the bigger picture in the sector - and the encouraging signs for the future.

In 2003 manufacturing output in the UK grew 0.4% - above the US (0.3%) and Germany (0.2%), and above that in France, where output fell (-0.7%). Orders are also picking up, and productivity is up over a fifth since 1997.

Manufacturing productivity increased by over a fifth between 1997 and 2003 - and export volumes in the UK are up by 75% in the last 10 years and have doubled in the last 15 years.

As you know Britain remains the top inward investment destination in Europe - with projects up 14% on last year - and it's great news that this year 30% of them were in high value manufacturing like electronics, biotechnology, and pharmaceuticals.

And I warmly welcome the fact that the numbers of Modern Apprenticeship trainees, surely one of the best barometers for the sectors future, is up from 75,000 in 1997 to over 255,000 this year.

If we are going to build confidence we also need to celebrate our manufacturing successes, to draw attention to those leading-edge industries where British based companies, and their workers, lead the world:

Our aerospace industry - the largest outside the US - a market forecast to grow by at least 25 per cent in real terms, to 250 billion a year in the next 20 years;

Our car industry - which contributes over 8.5 billion to the economy, employing almost a quarter of a million people.

Our biotechnology sector is the largest in Europe - 2nd only to the US, and our pharmaceuticals industry - worth 250 billion - is growing at a rate of almost 5% a year.

Of course, I recognise that championing the best will not, on its own, overcome some of the problems of the rest. Unions and manufacturers want the Government to 'put its money where its mouth is' and I understand that.

But through our manufacturing strategy - delivered in partnership with unions and industry, with today's review of that strategy, and with our recent spending settlement - that is exactly what we are doing.

To close - we can't stop the shift of low value, labour intensive production to lower wage economies. Manufacturing, like all other areas of our economy must compete on the basis of value-added and high skills.

But the strategy and the action plan we're publishing today - driven forward by the Manufacturing Forum - shows us the way forward.

Now is the time everyone to focus on a positive future for British manufacturing.

Thank You.



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