Manufacturing (East Midlands)

Chris Heaton-Harris Excerpts

Tuesday 12th February 2013 Westminster Hall

[Chris Heaton-Harris (Daventry) (Con)]

If he has a mid-life crisis.

[Mr Spencer]

I am sure the Minister is more than comfortable with his own life, but should any Member decide to purchase a sports car, I highly recommend one manufactured in the constituency of Sherwood.

Next door is a company called Jonam Composites, which is at the other extreme. It manufactures high-tech composite bicycle spokes that have the same tensile strength as steel but are much lighter. That is a real indication of the progress we have made in manufacturing in Nottinghamshire and the east midlands. We are going in a high-technology direction. We are at the cutting edge of what is possible in manufacturing. As a country we must acknowledge that we will probably not become the great shipbuilders of the world that we were, but there are lots of opportunities to be right at the cutting edge, as we always have been. We were at the cutting edge of the industrial revolution, and we can remain there by looking to new technologies and using our skills, so that we can once again trade with the rest of the world and ensure that we are at the right place.

One area we often overlook is food and drink. Again, Nottinghamshire has a great tradition of producing food and drink with companies such as Home Ales and Mansfield brewery, which sadly have been bought up and gone to other parts of the country. Food manufacturing makes an enormous contribution not only to the east midlands but to the UK as a whole. Mr Hollobone, I know your constituency has an interest with companies such as Weetabix.

Smaller manufacturers have been mentioned. Every butcher in my constituency adds value to their product. They produce their own burgers, pasties and pork pies. Given the issue that is right at the top of this week’s political agenda, anyone who wants a top-quality burger or pork pie and wants to know exactly what has gone into it can buy one from their local butcher. [Interruption.] The hon. Member for Leicester South (Jonathan Ashworth) tempts me to mention farm shops, but I would have to declare an interest if I did. By going down the chain to smaller manufacturers, people can get the high-quality products that consumers are keen to purchase.

However, we can do more. The east midlands is ideally placed. We hear a lot about our country’s north-south divide, but the east midlands are smack bang in the middle. Geographically, we are ideally positioned to trade with the rest of the country. We have great connections with the A1 and M1, fairly good railway links, the possibility of High Speed 2, and East Midlands airport and Robin Hood airport. We have lots of good communication links and the ability to get products in and out.

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[Mr Spencer]

I agree, and it is important that we as a Government address those concerns, but the hon. Gentleman will recognise how difficult it is to strike a balance between energy prices to consumers and to industry. It could be argued that logically, the more energy one buys the more cheaply one should get it; that would have a knock-on effect on our consumers and constituents. It is difficult to strike that balance and ensure that energy-consuming industries get a reasonable price, as well as our constituents who are struggling to pay their energy bills.

It comes down to energy security as well as price. Within the east midlands, the Trent valley provides a lot of electricity generation, so at least we are not far away from a power station, but we need to do more. The Government particularly need to consider carbon leakage. Energy-intensive industries are under pressure and looking to relocate elsewhere in the world. We talk about reducing the carbon footprint of industry and manufacturing, but it would be wrong to push out industries to other parts of the world where energy is probably bought from higher-carbon sources than in the UK, and then to import the goods. We should be aware of that.

[Chris Heaton-Harris]

I congratulate my hon. Friend on securing this debate. On the point about energy, we are now in the midst of global competition on a scale never seen before, and it is a threat to UK manufacturing. In the US, gas has fallen to one sixth of the price of four or five years ago, while our energy prices continue to rise, partly because of the contribution made to bills by wind energy. It is causing great concern in businesses such as Tata and Cummins, in my constituency. Does he have any views on that?

[Mr Spencer]

I recognise those challenges. Energy supply will be vital if we are to see our way through and ensure a thriving manufacturing sector. The Government need to address it and are addressing it. We must ensure that we have energy security as we move forward.

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[Chris Heaton-Harris (Daventry) (Con)]

It is a pleasure to speak under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Sherwood (Mr Spencer) on securing the debate. I should follow the declaration made by my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) by saying that I used to buy his product when he wholesaled it, and I made more money out of it than he did.

I was very lucky to be the Member of the European Parliament for the East Midlands for 10 years. One of the wonderful things that Members of the European Parliament get to do is travel widely and see in operation all the businesses that invite them. Not many hon. Members from Lincolnshire are here today, but there are fantastic manufacturers in Lincolnshire. Siemens in Lincoln is one of them, and it has just won a massive contract in Australia. In my constituency, I have the full range, as every other hon. Member does, of big, medium-sized and small manufacturers. There is Cummins, a big multinational. Power generation is its thing. It has produced diesel engines in the UK for more than 50 years. It is in the top 40 list of UK exporters, with 70% of its products exported, generally outside the European Union.

Mercedes-Benz has its Formula 1 precision engine plant in the village next to where I live, Brixworth, where it employs more than 600 people. It illustrates some of the issues that manufacturing faces in more rural areas, because it has problems with a consistent energy supply and had to put in, at huge cost to itself, a broadband supply, because it takes real-time readings from precision engines firing round Formula 1 circuits across the globe and can adjust things almost remotely from my constituency.

I have the fantastic shoe manufacturer Barker in my constituency—Barkers are just slightly better than Loakes. The Northamptonshire shoe industry is booming now, because it is a quality product that is being exported massively across the world.

Like other hon. Members, I have food manufacturing in my area. Butcher’s Pet Care has just invested £38 million. It produces food for the pet sector—and it knows what goes into its product. There is proper traceability and line of sight.

Hambleside Danelaw produces roofing and ventilation products, rooflights and cladding. That sounds boring, but it is a very big business. Its products are on all the big sheds that we see around the place. That is its business; that is what it does, and it manufactures in my constituency. There are also smaller companies. B and D Dyes produces little washers that go into very fast cars. It is amazing precision engineering.

These companies are doing fantastic things, and they are all served by the logistics base that the east midlands is so good at providing—we are proud of how we do logistics—and by a good education base, which is constantly improving. On my patch, I have Moulton college; a UTC will be opening in the next few months; and there are very good regional universities. What does that lead to? It means that I am very lucky in my constituency; I do know that. There are more jobs on offer at my local Jobcentre Plus—or there were at the end of last year—than there were people on jobseeker’s allowance across my constituency. Not many constituencies can say that.

There is more interesting news from the Northamptonshire chamber of commerce, whose latest report to MPs said that despite concerns about some things, which Government can do very little about—they include the cost of raw materials, competition and cash flow—Northamptonshire businesses, in both the manufacturing and services sectors, had reported an increase in confidence relating to both expected turnover and profitability in the coming 12 months. There is good news out there. Manufacturing in the east midlands is a sector that we should be very proud of and should nurture as best we can.

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[Mr Wright]

I certainly will. An important characteristic of a good and responsible company is that it realises that it is part of a community, not isolated from it, and contributes, not only directly by providing employment, but to social good.

The hon. Member for South Derbyshire mentioned Toyota, an important manufacturer for not only the region, but the UK. I am looking forward to visiting the Toyota plant next Tuesday—I am giving her advance notice—to see the investment recently pumped into building the new Auris model. The investment in the new plant totals £100 million, and is creating an extra 1,500 jobs, with a further £85 million spent in the local supply chain.

The shape of the region’s economy is distinctive. It is particularly strong on mid-sized businesses that are crucial to the growing specialisation and increased productivity that manufacturing requires. The Mittelstand in Germany is often cited as a reason why the German economy is so successful, and if there is an equivalent in the UK, I suggest that it is in the east midlands. Mid-sized firms employ 290,000 people in the region. I agree with the conclusion in Grant Thornton’s report on the mid-sized business sector:

“MSBs—many of the East Midlands’ and UK’s most dynamic organisations—are integral to the recovery prospects and long-term health of the British and local economy.”

Within that, Government’s role is to provide a framework in which businesses can flourish, and to provide resources—whether by sector, by region, or nationally—so that businesses can realise their potential and enhance our competitiveness.

I therefore have a number of questions for the Minister. My first is on how Government procurement can help manufacturers and their supply chains. I am pleased to see my hon. Friend the Member for Derby North here, because he has been a strong champion of Bombardier. We are all aware of it, because it is probably the most vivid example of Government procurement policy failing British manufacturing. The Department for Transport looks specifically at price, rather than thinking about wider value to the supply chain; that illustrates that the Government do not seem to be joined up. What has the Minister learned from the Bombardier example? How can procurement back British manufacturing? I do not believe in protectionism at all, but we can have patriotism in procurement policy to create, as my hon. Friend the Member for Derby North said, a level playing field for British companies. Other nations do it; we should too.

[Chris Heaton-Harris]

I point out to the hon. Gentleman that in France there is a social element to the procurement of big projects—something that we do not have. If it is legal for the French to take that approach, surely it must be legal for us to do so.

[Mr Wright]

I absolutely agree. We should use economic values. If Bombardier or any other company fails to win a contract, we should consider the wider economic consequences, in terms of lost taxes, the money that could have been pumped into the local economy and the losses in the supply chain. Those important factors should be part of procurement decisions.

The second point I want to mention relates to a particularly distinctive strength of the east midlands economy and its manufacturing firms: the supply chain. I am interested in it, because it is an important part of improving competitiveness. In November last year, the Minister announced the advanced manufacturing supply chain initiative—we are now on round 2. Despite the importance of mid-sized firms in the east midlands and their potential, will he confirm that no east midlands firm was successful in the bids? What will he do about that to help to realise the potential in the supply chain?

Thirdly, the whole House will agree on the importance of an export-led economic recovery. As we heard today, there is potential for that in the region, but the Derbyshire and Nottinghamshire chamber of commerce’s latest quarterly survey says:

“Export sales are at their lowest levels since December 2009”.

It goes on to say:

“Net manufacturing export sales balances remain significantly lower than the national averages.”

As an interested outsider, it is clear to me that the region is not reaching its potential for an export-led recovery. What can the Minister do in conjunction with UK Trade & Investment and others to ensure that that potential is realised?