BRITAIN CAN DO VERY WELL WITHOUT HIGH-TECHNOLOGY INDUSTRY. DO YOU AGREE?

RESULT:
AGREE - 46%
DISAGREE - 54%

It is interesting that respondents were almost equally split.
Here are some of the issues:

• It is almost certain that mass manufacturing work will move to countries where labour is cheap. This process has been accelerated by the development of good manufacturing skills in countries such as China, plus the fact that engineering specifications can now be transmitted electronically, thus easing the processes of production engineering.
• The exception to this rule may be where the manufacturing process is closely linked with design and production engineering - so that the integration of these processes is absolutely critical to product development and innovation, and the quality of the final product is reliant on very close integration of all processes from design to manufacturing.

This tendency will be reinforced where the value of the final product is high. Some high specification automobiles and most aircraft fall into this bracket.

• Countries that do not compete in industries that rely on innovation and the design and production of high-specification products with a high technology content will end up by losing their position in industries based on physics, chemistry and biology.
• An alternative to these is knowledge-based service industries, like consulting, financial services and banking, design and media.

Here the essential base for success is education, people and the existence of an environment that is encouraging to creativity, so that high-calibre people are attracted and retained.

• Failing any of this, indigenous industries are likely to be in the lowish-skill, low-pay services category. Retail, general services like cleaning, leisure and consumer entertainment are mainly like this.

Where does the UK stand in all of this? Here is a 'Quick and Dirty' snapshot:

1. There is a significant deterioration in competitiveness in many high-technology industries. There is still a considerable wellspring of creativity in the Universities and amongst the populace in general, but the capacity to turn all of this into productive enterprises appears to be lower than that of many other developed countries. At the level of larger enterprises, Britain still has a reasonably strong position in pharmaceuticals and two major companies, Rolls Royce aero engines and BAe Systems, both in the aerospace and defence industries.
   In all other high-knowledge, high technology sectors, the UK is markedly under-represented by substantial companies. These include:
   • IT hardware
   • Electronic and electrical equipment
   • Semi-conductors
   • Office, accounting and computing equipment
   • Radio, TV and telecommunications equipment
   • Chemicals - a rapidly declining sector in the UK
   • Automotive
   • Computer software, except for standard software.
   • And for good measure, Investment Banking and international Consulting - and probably to come, Stock Exchanges!
   This list might be described as the knowledge and technology-based sinews of a modern economy.
   
   This rather negative picture becomes clearer when it is seen that most indicators of an innovative technology-based economy are heading the wrong way. These indicators include R&D spend, patent generation, capital investment and university research - all of which are either lower than most other developed countries or heading in the wrong direction - mostly both.
   
   The underlying causes of this new 'British disease'? Undoubtedly our old friends: a lack of interest by investors in long-term support for complex industries and a lack of management skills.
2. The UK has a healthy position in many creative industries from entertainment through architecture and media to fashion design. These industries are more suited to smallish creatively-led organisations, in which Britain is relatively strong. But, once again, the UK has lost out in industries that require scale for competitive success. There are no large UK competitors in Investment Banking, international Management Consulting or international Engineering Contracting. The City of London financial market, lauded by many as a jewel of the economy and the pride of Britain, is almost entirely foreign-owned.
3. There has been a veritable explosion in the retail, leisure and general service sectors of the economy. This is fine if it was balanced by equivalent growth in more knowledge-intensive industries - but it isn't.

To Summarise:

Britain is probably sliding towards a high-employment, lowish average wage, low added-value, lowish-knowledge economy - where a large slice of the intellectual capital needed to support a developed economy is foreign-owned. This is backed up to a fair degree by employment data that show that new employment is substantially in lowish-paid and part-time jobs, with a minority of very high-paid jobs also being created. The loss of jobs appears to be highest at middle-income levels, in junior management, technician and skilled manual work - the sort of jobs that used to be more plentiful in high-technology manufacturing industries. Where there is demand, it would also appear that not enough skilled people are being trained.
The high ground in industries based on innovation and advanced technology is increasingly being left to foreign competitors. If there is not a marked reversal in the investment trends of the last few years it is likely that newer competitors such as China and India will start to build on strong positions established in manufacturing and knowledge-based services, build strong capabilities in design and development and erode our competitive positions still further.
We believe that developed economies will only remain so by creating intellectual capital at a level at least equal to their competitors - and high technology is a vital creator of this capital.
Food for thought!