2014 02 – Manufacturing in Britain

‘We’re going to save the world through exports’:

Trade minister and former BT boss on mission to get firms to emulate German industrial machine

By Ruth Sunderland

 Lord Livingston, the BT boss turned trade minister, is ensconced in an economy-class seat on the 7.07am train from Euston to Stafford.

Light is only just breaking through the rainy London skies, but for him it must feel like the middle of the day, as he has already been up for hours to do two early morning radio programmes to evangelise about British exports.

If he had continued in his former job as chief executive of BT, Livingston would not be squeezing himself into a seat on a Virgin train, but rubbing shoulders with the most powerful people on the planet at Davos.

003 ManufacturingBut he insists he prefers his trip to the West Midlands, where he is on a mission to encourage mid-sized British firms to emulate the prowess of their German counterparts at exporting, to yet another sojourn in the expensive Swiss ski resort.

‘It is my first regional trip as trade minister and the first year in seven that I am not in Davos,’ he says. Can Stafford really be preferable to Davos? ‘Oh gosh yes. We are going to save the world in our own way, and we are going to do it through exports.’

His next trip is to Mexico and Colombia, he says – but only after Essex and Glasgow. Livingston was highly acclaimed as the chief executive of BT, and at just 49 years old could have had plenty more years at the helm. Yet when the Prime Minister asked him to take on the trade brief, he felt he had to agree.

‘I’m not a politician, I did not have ambitions to go into politics, but he said it is important for Britain.’

It is important. Livingston is speaking at an event bringing together British firms with members of the fabled German Mittelstand – that is, the medium-sized, mainly family-owned, export champions that form such an important part of that country’s industrial machine.

003 Labour Costs

The conference is taking place at the visitor centre of JCB, which is one of the few companies in the UK to succeed at the Mittelstand model – albeit that it is now large, rather than medium-sized.

Lord (Anthony) Bamford, the chairman, of JCB, who poses with Livingston for photographs in front of a digger emblazoned with a Union Jack, says there are ‘lots of lessons’ the UK can learn from Germany.

‘We need a long-term industrial policy. Germany has spent 60 years with an intense focus on being the best. We need a shared political understanding about the importance of industry. There undoubtedly has been one in Germany.

‘The fundamental reason we have to do more on engineering and manufacturing is our balance of payments deficit. In Germany, they have a surplus every month, that is why they are so rich.’

One of the reasons, he says, that the UK lost a lot of family firms was punitive taxation in the 1960s.‘I am fearful of returning to the trade union dominance and putting in the sort of policies that were so bad for Britain in the Fifties, Sixties and Seventies, such as high taxes and nationalisation.’

Livingston agrees that handing down firms through the generations has not been the same tradition here as it has in Germany, partly because in the UK people have aspired to enter the professions. His own family could be seen as a case in point. His great-grandparents came to Britain from Eastern Europe, penniless, and set up a clothing firm.

‘They became prosperous, but prosperity meant 12 people sharing a two-bedroom flat in Glasgow.’ Livingston’s father was the first in the family to go to university, while he trained to be an accountant.

He says: ‘Being in business has been seen as less aspirational than it should be. Rather than just wanting to be investment bankers or lawyers, which are great professions in their own right, we should be talking up business as a career.’

One of his hobby horses is to encourage British firms to look to emerging markets such as China. Livingston points to recent deals including selling tea to the Chinese, from the Tregothnan plantation in Cornwall. He adds: ‘Probably the strangest deal is to export £45million of pig semen to China.’

Whether the UK can realistically hope to compete with Germany’s manufacturing and export muscle is questionable. Livingston cites a report by think-tank the CEBR suggesting the UK economy might overtake Germany by 2030.

That report, I tell him, prompted Bob Bischof, the chief economic adviser to German Industry UK, to declare that pigs might fly. ‘Future pigs are flying,’ Livingston laughs – but it’s clear that when it comes to exports, he is deadly serious.

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