Karl Koehler, CEO of Tata Steel’s European operations, today called for urgent action to nurture Britain’s Foundation Industries with the appointment of a single minister to champion the sector in government and the creation of a level playing field on key issues such as energy policy.
The call comes after a report highlighted the contribution the sector makes to the UK and the damaging effect the financial crisis had on this strategically important sector of the British economy. The sector contracted by almost a quarter during the recession. Urgent action now is needed to support recovery and help Foundation Industries capitalise on the economy’s return to growth.
The report by PricewaterhouseCoopers (PwC) challenges many existing perceptions about Foundation Industries to emphasise the role they play in driving innovation and skills, as well as providing nearly half a million jobs and supporting millions of others.
Mr Koehler said a single point of focus in government was needed to nurture and expand industries which include metals, chemicals, glass and cement.
Mr Koehler warned: “This report makes clear how important Foundation Industries are to the UK.
“Much of the cutting-edge innovation seen in parts of British manufacturing and construction in recent years wouldn’t have been possible without home-grown Foundation Industries working hand in hand with them.
“If the Government is serious about rebalancing the economy and creating sustainable jobs in the regions, it must recognise the importance of the UK’s Foundation Industries.
“We’re not asking for hand-outs but we deserve a level playing field and an equal seat at the table.”
UK Business Secretary Vince Cable was at the launch of the report today alongside Mr Koehler at The Shard, Western Europe’s tallest building, constructed using thousands of tonnes of steel made in Britain, glass and concrete.
Business Secretary Vince Cable said: “Industries like metals, chemicals and glass make a significant economic contribution and help drive the success of high-performing sectors like the car industry.
“Government is investing in hundreds of projects to get our economy going from the National Infrastructure Plan to our £2.6 billion flagship economic plan to create jobs outside of London - the Regional Growth Fund.
“Many of these projects require high-quality steel and other materials. The Government's industrial strategy is giving business the confidence to invest - delivering skilled jobs, driving growth and building a stronger economy.”
Mr Koehler urged government to back Foundation Industries to help rebalance the economy towards industry and regions outside of London and the South East after the report highlighted the government’s role in ensuring key business costs, such as energy, are competitive.
Foundation Industries – the companies which sit at the base of multiple, diverse manufacturing and construction supply chains – employ almost half a million people in the UK. Foundation Industries accounted for about 30% of the UK’s exported goods in 2012. Turnover is close to £69bn per year which is 3% of the UK economy as a whole.
The report highlighted how sectors such as automotive, aerospace and construction are important buyers of Foundation Industry products. It discovered that Foundation Industries have a significant multiplier impact on the UK economy through local supply chains, which is as high as six times in terms of employment. They are also particularly important to regions outside London and the South East.
Terry Scuoler, Chief Executive of EEF, the manufacturers’ organisation, said: “I hope ministers will give careful consideration to this report because manufacturing and the wider economy is in many respects reliant on our Foundation Industries. If, as a result of high energy costs or other burdens, they become uncompetitive we will see more of them disappear from the UK as emerging economies thrive. It is not realistic to think we can exist without these industries which would be a disaster for the UK. Government must act to support this vital part of our infrastructure.”
Foundation Industries invest 6% of the UK’s total investment in R&D and are responsible for almost a fifth of manufacturer’s capital expenditure in the country.
Proportionally more businesses in the Foundation Industries are engaged in innovation activities than the UK average (and on a par with knowledge intensive service industries). They provide more training days to each employee and spend more on R&D as a proportion of their investment than the UK average.
PwC’s report Understanding the economic contribution of the Foundation Industries says the sector was disproportionately impacted by the 2008 financial crisis which declined by almost a quarter to 2012. Thousands of businesses – many of them small – closed during the downturn.
The report emphasises how the government could take more joined-up action to improve the sector’s competitiveness, particularly as they are often trading in a global marketplace.
A full copy of the report can be read here
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About the PwC report Understanding the economic contribution of the Foundation Industries
Tata Steel commissioned the report to assess the current and potential future contribution of the Foundation Industries to the UK economy. The focus of the analysis was on the economic contribution of the Foundation Industries which are characterised by serving multiple strategic supply chains (e.g. automotive, energy & green technology, aerospace, infrastructure and construction). As such, they play an important part in enabling the UK to develop a modern manufacturing sector.
About Tata Steel in Europe
The European operations of Tata Steel, whose main steelmaking sites are in the UK and the Netherlands, comprise Europe's second largest steel producer. They supply steel and related services to construction, automotive, packaging, rail, lifting & excavating, energy & power, aerospace and other demanding markets worldwide. The combined Tata Steel group is one of the world’s largest steel producers, with an aggregate crude steel capacity of more than 29 million tonnes and approximately 80,000 employees across four continents.