The UK position In a country with a mineral or agricultural export deficit, manufacturing is about the only way to generate the: funds to remain solvent: the manufacturing sector generates more than 60% of our external revenues, even though the UK runs a pound 20 billion deficit in manufacturing; service industry generates less than 20% of our external revenues but manages a surplus of only pound5 billion. So manufacturing is at present vital to the UK's solvency, although maybe in time to come the service industry could become more internationally traded and will replace manufacturing as our main revenue earner. Not only that, but manufacturing initiates most of the work in our economy. And within manufacturing, it is the product developers that initiate the work. not subcontractors. So without product developers, there would be a major decline throughout all sectors: most manufacturing subcontractors would disappear. service industry might halve; Government revenues might more than halve from reduced ability to raise tax revenue. So product-developing manufacturers are vital to the UK's financial prosperity and solvency. How financially successful are UK product-developing manufacturers? The purpose of a commercial enterprise is to generate a return on investment for its owners while respecting social and legislative aspects. There is a huge difference in return on investment between the service and manufacturing sectors-more than 2:1. The reason is international competition: within limits, the service industry can charge what it likes provided it is competitive locally; e.g. hotel prices in Bristol are far higher than in Huddersfield: whereas most manufacturing prices are set by imported competing goods. UK manufacturing return is low because: 100% best practice in manufacturing processes is almost entirely absent (few know what kaizen is or implies); best practice in the product development process is rare. But product development controls a companys future cost base: product development sets the company's direct costs and most of its associated indirect costs; manufacturing practice can magnify the advantage but cannot overcome design disadvantages without incurring high change costs. That is why product development is key to companies' future return on investment. So what are UK product developers main worries? Their main concerns are return on capital and the high level of their internal cost base. Many blame their uncompetitive costs on the strong pound sterling despite the UK having the third lowest labour costs in the European Union (and joining the Euro would not reduce the strength of the pound sterling). So how are they performing? The few UK strengths are mainly through developing a unique product, usually in a niche market where uniqueness and benefits outweigh any inefficiency of production practice and price: e.g. hi-fi systems, fishing rods, specialist industrial equipment-small random islands of competence (e.g. ICG's scanners, 600 Group's CNC lathe, Aculab's telecoms equipment). Or from big R&D strength in an international market: e.g. oil and gas production, pharmaceuticals. aerospace: the top 10 companies in this sector spend half the UK's total R&D spend. Many also worry about the length of time it takes to develop products: but only around 5% investigate their potential customers well enough; few are technically strong. by international standards, at devising, designing or making the product; very few monitor and control the right factors when running development projects. As a result, probably fewer than 5% regularly achieve their time and cost targets. and many products never achieve their sales targets. Conclusion Strong product development performance by the manufacturing sector is necessary to maintain UK prosperity through all sectors. The most important factor that would improve UK product developers' performance is for them to be aware of what is possible: most are ignorant of how great their aspirations could be or are too complacent to find out. A solution is more widespread and focused dissemination of information on what is possible, and sharing of experience, e.g. through AME-UK, the national press (e.g. the Sunday Times Enterprise Network) and publicizing web sites on product development information (e.g. www.mynott.com/tics).
