Sir: I read with interest Jeremy Warner's article "Britain's manufacturing heads east on a slow boat to China" (19 August), arguing that despite the increasing investment in China and the Institute for Public Policy Research's view that there is little the Government can or should do, it is important that Britain continues to maintain a modern skill base in manufacturing. We support the view that the UK should invest in a strong manufacturing base but would argue that it must concentrate on developing and producing innovative, technology based products if it is to survive into the long term.
The flow of foreign direct investment into developing economies continues to increase and it is inevitable that, as the capabilities and the cost of labour in those regions rise, they themselves will realise that they need to look beyond production and turn their focus to higher value activities such as design, development and product support. This is already happening in eastern Europe countries and will exacerbate the UK's situation as maufacturing activity begins to relocate as well.
A close and responsive link between R&D and manufacturing is vital if UK businesses are to successfully compete on the global markets. UK investment should go into the skills, processes and technologies that produce innovative products. However, the reality of manufacturing is that global businesses have to invest at home to develop and produce new products and in the low cost economies to reduce costs and enter the growing markets in those regions.
This is something that the major automotive and consumer electronics companies have been doing for some time and is one reason why the biggest economies in the world have both a strong domestic manufacturing base and substantial investments in operations in developing economies.
TOM TOTH
Manufacturing Industries Practice
PA Consulting Group
London SW1.
