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29 October
Comparing competitiveness

In the previous post I said I’d come back to the background documents produced in support of the European Union’s new industrial strategy policy. So I have. The document I liked most was the one that does a comparison of “competitiveness” factors across EU states. In particular, it measures the proportion of the economy that manufacturing accounts for in each of the 27 countries, in terms of both total employment and Gross Domestic Product.

The figures are a little out of date, as they’re from 2008 or earlier, before the fall. Even so, there are points of interest to those of us who believe that there’s a particular virtue in manufacturing as a method of adding value. Things aren’t necessarily all that you might suppose.

Let’s start with the myth that the UK is uniquely de-industrialised: it isn’t, though it seems to be at the lower end of the EU norms. We have 10 per cent of the workforce engaged in manufacturing and manufacturing provides 14 per cent of the GDP. Places that you’d expect such as Cyprus and Luxembourg are lower on both measures; conversely some of the east European economies still have around a quarter of the workforce in manufacturing. Of our nearest and dearest, the ones we most compare ourselves with, France is fairly similar, with 13 and 12 per cent, while Germany is higher on both counts at 19 per cent of workforce and 23 per cent of GDP.

A very crude measure of manufacturing efficiency might be to see which countries in the EU have higher manufacturing GDP proportionately than manufacturing workforce. The UK, at 10:14 seems to be good on this, bettered only by Sweden (12:18). Both France and Italy (21:18) and many of the east European states employ a higher proportion than they get back in terms of percentage GDP. Lots and lots of other factors would be at work here, of course, and I’d not propose this as a measure of any sort. But the figures are there to be played with.

So too is some commentary. And for the UK, the comments are not unexpected: we’re quite good at innovation and maybe we’re a little vulnerable to downturns because of the amount of the economy in the service sector.

Who, though, is this comment about? “The output of R&D activities in terms of patents, new products and high productivity is remarkable. From a global perspective, however, it is at the lower end of leading countries in innovation performance.” Yes, it’s that paragon of all the manufacturing virtues, Germany. And while there may be a degree of the EU casting around to find something bad to say about everyone – it mostly succeeds in doing that – it is also an indication of another factor. Which is that being world class these days means looking at the whole world, not just the neighbours.

29 October
Summit's up: the competitiveness angle

The UK news media are full today of reports about how the latest European Union summit has had its agenda dragged back into reality through the intervention of Prime Minister David Cameron. Where the EU had apparently hoped to slide through a 6 per cent increase in its budgets, Dave and his mates (Angela Merkel and Nicolas Sarkozy prominent among them) forced a “complete capitulation” to a measly 2.9 per cent. Or at least that’s how it’s being spun here, where 2.9 per cent still seems rather better than most of us are achieving.

Anyway, Superdave’s intervention has knocked the original EU summit agenda out of the headlines, and one of the things that’s now being overlooked is a paper on an EU industrial strategy for the years to come. This is a shame, since the EU is, like it or not, a big deal for much of business and industry. The gist of the strategy is that EU policy should be focused on increasing and improving competitiveness. You might think this is not exactly revolutionary, but nor is it controversial. And controversial is what the EU aims mostly not to be. “Don’t rock the gravy boat” could well be its motto.

Inside the strategy there’s a list of 10 “key actions” some of which, such as upgrading transport, energy and communications infrastructure, seem a bit outside the EU’s remit to do. Especially now its budget’s been cut.

Others of the key actions, though, make you wonder. There’s one, for example, which says that “An explicit and thorough ‘competitiveness proofing’ of new legislation will be undertaken”; sounds good, but surely they must have been doing this before? And if not, why not? Another says that Europe will now have a “space policy”. My recollection is that there’s already something called the European Space Agency: does this mean that the Agency’s been operating all these years in a policy vacuum?

Fleetingly I wondered whether I had, in error, clicked on a document dating from the first days of the EU back in 1957, so naive does it all seem, so divorced from today’s difficult realities. But no. This is today’s thinking and you can go look yourself: all of it is available on the EU website on this link here: http://bit.ly/celfED. And from there, you can get into background papers that contain what I think are interesting stats about relative competitiveness of different EU states, which I’ll try to come back to in a later post this afternoon.

28 October
Building a new bonfire

A couple of weeks ago in the UK, our new government produced what was tagged “the bonfire of the quangoes”. This was the exercise that most new administrations go through of taking a torch to many non-value-adding publicly-funded-but-not-always-hugely-accountable authorities created by its predecessor. (A quango is a “quasi non-governmental organisation”, and the word seems to be peculiarly British, though the concept is universal.)

Anyway, what usually happens is that a new government abolishes in its first few months large numbers of bodies set up by the previous government and then sets about over the subsequent months and years creating new ones or re-creating the ones it’s just abolished. And today we’ve apparently had an example of this. A white paper outlines the replacement bodies, called Local Enterprise Partnerships, or LEPs, that will do some of the economic development activities in England formerly undertaken by soon-to-be-abolished Regional Development Agencies (or RDAs). There were 10 RDAs in England; today, 24 new LEPs got approved. The detail is here: http://bit.ly/9yDyx6

Plus ca change? Maybe. The white paper would have us believe that the new LEPs will be subtly different, rooted in local communities and with links into local government. And in that RDAs got criticised for adding a tier of extra bureaucracy, whereas LEPs are apparently going to use existing structures rather than creating their own, then there may be scope for savings and efficiency. But…

The “but…” is because in all this there are questions that don’t seem to get asked or answered. Here’s a few that just occur to me without too much thought: doubtless someone will tell me if they’re completely muddle-headed.

First point goes back to basics: in some parts of England, the RDAs were all but invisible and probably all but unnecessary; in others, though, such as the West Midlands, where there have been seismic shifts in industrial activity, they seemed to have a useful coordinating and channeling role. To treat them all as identical is maybe questionable when the need is not identical.

Then again, the map as now redrawn with the new LEPs appears to have some significant gaps. Maybe there will be more LEPs to come, but to leave the Black Country with nothing while all the surrounding areas have an LEP seems bizarre, while the North East, another region where the past 25 years have seen fundamental shifts in economic activity, has fallen outside the scope of this entirely. Does Surrey really need an enterprise agency more than Sunderland?

A third point: one of the really good things delivered through the RDAs has been the Manufacturing Advisory Service, which does what it says on the tin and has been instrumental in delivering lots of sound business advice to companies large and small across the regions. This apparently survives intact, but how will reporting to 24-plus LEPs rather than 10 RDAs help?

And finally (for the moment at least), I remember well a Japanese industrialist telling me years ago that one of the oddest things when his group decided to set up European manufacturing was that the Germans sent one delegation to bid for the investment, the French sent one, and the UK sent about two dozen, all from different local areas, all of them apparently more concerned to denigrate their immediate neighbours than to win the business for the UK as a whole. Of course, the point of his story was that the group came to the UK anyway… but the point about duplication of effort remains.

Does today’s white paper answer these questions? Or is it just setting up the material for another bonfire in a few years’ time?

22 October
Swimming in the sea of tranquillity

For some obscure historic reason, my computer’s homepage is set to www.yahoo.com and Yahoo, strangely, thinks I’m based in Austin, Texas. No worry: at this time of the year, it’s a place I’d rather be. What that means is that I get an Austin angle on the news Yahoo presents, which is sometimes a bit off-centre. Rarely so much so as today, though. And yes, we’re back into the world of strange units of measurement, where I’ve been before.

The Yahoo headline today is “Hole blasted in moon reveals lots of water”, and instantly I’m agog to know where, what, why, how and, to a lesser degree, how much. It’s this last question Yahoo wants to answer. Its subhead reads: “Findings from a crash into a crater show it may contain enough water to fill 1,500 Olympic pools.” I very much like that little word “may” in the middle of that sentence. Let’s not get too certain about all of this. After all, it might prove to be only 1,499. Or 1,501. Either way, I’m pretty excited about this apparent proposal to build a huge swimming complex on the surface of the moon: that should help the construction industry out of its present doldrums.

But wait, there’s more? Yahoo’s news style is to send you on your way with a pithy little one-liner at the end, which you click on to get to the full story. The one-liner this time reads: “Is it safe to drink?”

So we’re getting Olympic-sized pools that might double up as drinking-water reservoirs on the moon? Oh, residents of Austin, Texas, where it is currently 20 past three in the morning, you don’t know what excitements you’re missing while you sleep.