Poverty Of Ambition

What’s wrong with Manchester?

John Lewis and Malcolm Evans outline keynotes in a new economic strategy to reverse Manchester and the North West’s industrial decline and foster a new culture of manufacturing and commercial excellence.

So, what’s wrong with Manchester? Why does the region punch below its weight?

Manchester used to be Britain’s export powerhouse – exporting all over the world but it now seems to be strangely subdued.

Sure, there’s plenty of froth about de facto second city status, cultural leadership, media and digital edginess, sporting achievement and academic presence…..but where’s the bedrock beneath all of this?

You could start by blaming the Tories of the 1980s who seemed hell-bent on emasculating British manufacturing industry and subsequent Labour administrations which explicitly or implicitly saw industry as an enemy, never as a potential national saviour.

Now there is a policy U-turn and David Cameron wants to rebalance the economy – to bring back manufacturing.

OK, so the financial services sector, once heralded as our rising star, has crashed and burned. The vast expansion of non-vocational higher education, as totemic to Blairites as home ownership was to Thatcherites, has produced………vast numbers of unemployed graduates.

But surely manufacturing is something we used to do: even if we wanted to get our hands dirty again, surely we couldn’t?

And aren’t economies with a fair degree of central support for people like the Chinese? Vigorous planning gets things done but it isn’t really English, is it? We prefer to have a vast non-productive public sector and to meddle in everything to do with business except funding it and providing it with skilled labour.

Even if we could get over our queasiness about rolling up our sleeves in productive industrial and commercial enterprise, haven’t things moved on so far that we couldn’t even if we properly tried?

Bleats that the UK is a high cost country don’t wash. Germany is also a high cost country but it has its wonderful “mittelstand” (export facing and fantastically successful mid-sized manufacturers) – go to a small town in Germany and you will find that it hosts a world class crane manufacturer. Go to the next town and it hosts a brilliant widget manufacturer, the next one is home to a leading luxury luggage producer – really quite inspiring, and anything the Germans can do Mancunians ought to be able to do also – but we don’t.

The Germans also lost a lot of their manufacturing industry (in 1944 and 1945) and had to rebuild it. They had the Marshall Plan and we have our Plan A, which entails non-experts prattling in the jargon of enterprise and high growth, with all its leveraging and digital-this-that-and-the-othering and utterly non-reflexive self-parodying.

So, how should we go about re-building our economy? A National Enterprise Bank for businesses is an obvious starting point, funded by the next round of quantitative easing – Lord Bhattacharyya supported this just a few days ago.

Despite what many people say, manufacturing in the UK is not quite dead and it can be resurrected. Land Rover is an example. The early Discovery was an engineering disaster but Ford turned it around and even though LR is now owned by Tata it has good products, strong exports and it creates jobs in the UK.

One day we may even export railway technology again, which would be appropriate for the city which built the first railway passenger station in the world.

But that is not enough; the UK needs some “quick wins” – businesses that can be grown to a global scale in 10 years. Software is one area where this is possible – the Cloud/SaaS model facilitates this.

Retail brands are a second area (Burberry has been turned around in less than 10 years and there are other brands that can be resurrected). Genetics is a third area that cannot be ignored. All these need to be supported by excellent marketing and branding. BMW does not just manufacture cars – it is probably the best marketing organisation in the world (OK – Porsche, Mercedes and VW might dispute this). One thing that all of these have is the ability to export.

Companies with these ingredients need to be created – not using central direction but by providing central assistance (the Singapore model) and by bringing together the top talents and by building teams. Building teams and bringing together early stage synergistic businesses is what the US VCs do extremely well. They have created successful high technology companies that in turn create wealthy individuals who then act as intelligent (tech savvy) Angel investors for start-ups. A combination of the Singapore-style assistance and US VC capability would serve the UK well.

The UK has some advantages. It is probably the most multi-racial and multi-cultural country in the world and we should harness these skills to assist in global marketing and exporting. We have a high proportion of well-educated people, whatever of the need to provide additional vocational honing.

We need to get the emerging generations thinking entrepreneurially. If one in 10 of the unemployed or underemployed graduates created a company that then took on 10 staff, UK unemployment would be virtually eliminated.

What else do we need ?

We need to have ambition: not ambition to be wealthy but a burning passion to build good businesses that treat all the people in the business well and which are focussed on exporting. We have lost this ambition to export – and to compete. Exporting may be difficult but it is easier now than it was in the 1840s when Hong Kong was founded.

We need to shake up the higher education system. The priorities are wrong, self-serving and the value of much of the output from the universities in the North West is poor. The focus must be on training a lot more people in STEM subjects. Students studying STEM subjects should not pay tuition fees in order to lay the vital groundwork for the next two or three decades of industrial and commercial renaissance.

We need to support the business founders who have the drive and vision, not by paying huge executive salaries on the basis that “we have to attract global talent”. Other countries don’t: we have fallen into the trap of aping the USA – a country that has now been exposed for living beyond its means. Lower tax rates for companies that export offer an additional incentive.

Many of us have children and everyone knows children who they love and unless we can turn Britain around their future is too awful to contemplate. Without jobs, without near full employment, there will always be a disenfranchised underclass and that creates social friction. Despite recent events, Norway and the rest of Scandinavia have a much higher level of social cohesion than the UK; the difference between the wealthiest and poorest in society is much narrower. Production, productivity and inclusion create social justice and an ongoing spiral of productive community.

The argument that we cannot afford any of this is wrong. We cannot NOT afford it and the money needs to be found.

Almost 200 years ago, when the new railway was being built between Manchester and Liverpool, it was discovered that the rails across Chat Moss, just west of Manchester, kept sinking into the wet bog, no matter how much foundation ballast was tipped in.

The solution was to float the railway on wooden hurdles and bunches of dried heath.

Today we have many, many people who will sit around and tell us that a different future cannot be built, that our dreams will only sink.

But we have a small but growing band of friends around us who would rather fashion the wooden floats and carry the cut heath.

They would rather see Manchester float than sink further.