UK Manufacturing Industry

Lord Lee of Trafford Excerpts

Thursday 8th December 2011 Lords Chamber

[Lord Lee of Trafford]

My Lords, Paterson Zochonis—now PZ Cussons—went public in the 1950s. It was capitalised then at just over £1 million. Today, it is capitalised at £1.5 billion. Shareholders have not had to put in a penny of further capital. The company employs 9,000 people worldwide, particularly and substantially in Nigeria and Indonesia. PZ, together with Nichols in soft drinks manufacture and Halsteads in floor coverings, are probably the best three examples of manufacturing industry based in Manchester—the home city of the noble Lord, Lord Haskel, who I thank for introducing this debate.

What characterises these three companies is that they are all family controlled. They have been carefully stewarded through the generations. Had they not been family controlled, takeovers would almost certainly have taken place in all three cases. I had the privilege of being a non-executive director of two of these companies, and my family invests in all three. Yesterday, JCB, which has been referred to, announced that it was investing £31 million in designing and manufacturing the next generation of heavy-duty engines to give their products a,

“huge competitive edge across global markets”.

That is another example of an excellent family business. As the noble Lord, Lord Bhattacharyya, said, we just need many more. Contrast this with yesterday’s announcement from Cadbury, following the acrimonious takeover by Kraft, that there will be a couple of hundred further unfortunate redundancies.

We have global positions in aerospace, pharmaceuticals, and food and drink, but the ownership—the siting of headquarters and manufacturing plants—is complex and varies considerably. Take BAE Systems, for example, which we regard very much as a UK company, where probably 50 per cent of the ownership is in overseas hands. It employs more people in America than it does in this country. At present, we have a service-dominated economy but, as has been said, there is a close relationship between a successful manufacturing company and successful service companies. We undervalue manufacturing in this country both in the valuations of many quality quoted companies, making them vulnerable to overseas takeovers, and in the perception of manufacturing as a wealth creator and a career. We need, I suggest, to build bridges between manufacturing and the wider public in this country.

When I was Tourism Minister in the late 1980s, I instigated the first ever conference on what I termed industrial tourism, bringing together the English Tourist Board and the CBI. It was at Centrepoint. The whole idea was to encourage people to visit our manufacturing and for manufacturing plants to open themselves up. Today, many larger companies in ceramics and whisky encourage visitors, as do niche businesses such as Hardy’s in Alnwick, a fishing tackle manufacturer, and Derwent Pencils in Keswick, but we need more.

I shall make four points. First, it should be the norm, not the exception, to open manufacturing plants and processes to visitors—subject, obviously, to health and safety compliance. Secondly, apart from putting a higher tariff on physics and maths, we need a far closer liaison between manufacturing industry and schools. Thirdly, we need much more positive media coverage of manufacturing and the investment opportunities that exist in our quoted manufacturing companies to be brought into people's homes, to encourage potential investors to take their own decisions rather than invest through funds or similar. Fourthly, we should be putting successful manufacturers on a pedestal in this country. They are surely as important as those participating in the big society. What sort of lead do we give here in your Lordships' House? We have many bankers, barristers, brokers, academics, medics, people from the world of advertising and the media, local government, the diplomatic corps and the military, but how many out of 800 in your Lordships' House have real experience of substantial manufacturing industry and exporting? I am not talking about non-executives; I am talking about major executives who have really been involved in wealth creation.

In my final minute, I shall make a couple of quick points. First, there are substantial opportunities in the manufacturing chain to create manufacturing companies in this country. For example, Triumph Motorcycles brings in 90 per cent of its parts from abroad. More could be done to develop the manufacturing chain here. My noble friend and colleague Lord Alliance was telling me earlier that we are now beginning to see a slow reversal, with textile and clothing manufacture beginning to come back to this country. Secondly, the Sunday Times last week reported that of the 100 fastest growing companies 50 per cent were in service, 25 per cent were in retail and only seven that I could identify clearly were in manufacture, so there is a huge job to do.