manufacturing, business management

The British economic miracle, if that's what it is, has been achieved without any marvels from manufacturing. Once, that would have been impossible. But today, so New Labour and several pundits assert, the thing-makers of industry don't matter.

How rising incomes are achieved is insignificant. So long as Brits earn more, even if only for their services as overpaid lawyers, the GDP will rise, and they can go on cocking snooks at the labouring Continental economies. Manufacturers begin at Calais - and so what?

The question is, of course, irrelevant in one respect; British manufacturing, as known and sometimes loved, evaporated long ago. Names like ICI, Courtaulds, Dunlop, Austin, Morris, Parsons, GEC, Hawker-Siddeley, Plessey, and whole squadrons of steel companies and shipbuilders have either disappeared: or formed combinations far less powerful globally than their former parts: or been bought and subordinated by foreign owners - some from that self-same Continent.

That still leaves a testing question: why did this calamity happen? Saying that it's no calamity is no answer. However ardent their passion for invisible earnings, the pundits surely agree that Britain would benefit materially from possessing one visibly great car maker (Mercedes-Benz, say) and still more from having two (BMW, too).

The decline of British manufacturing may be a fait accompli, but nobody meant it to be accomplished. Quite the reverse: governments poured taxpayers' money into industry, notably shipbuilding, aerospace, cars, steel and electronics. This political largesse was certainly part of the trouble. Getting money from ministers proved much easier and more profitable than competing with foreigners who (see Mercedes and BMW) were plainly better at engineering and management alike.

There's the rub - and the nub. Governments backed the wrong horses. Not that right horses, in the sense of world-class manufacturers with top-class managements, have been at all easy to find. This management malaise, for such it was, cannot be ignored today - because the managerial disappointments of manufacturing persist. They are not alone, either.

Take those vaunted financial services. Every major investment bank has been swallowed by overseas rivals of superior size and wealth. As for clearing banks, they attract as much ridicule and resentment as the Royal Mail - which is saying plenty. Beneath the clearers, merely regard the mess into which the former Abbey National mismanaged itself.

The nation of shopkeepers provides better examples. But Tesco stands head and shoulders above a sector where the sadly fallen Marks & Spencer - which quite recently enjoyed Britain's foremost management fame - struggles to find any kind of form. The new champions have also leapfrogged J.Sainsbury, another golden reputation that has faded away.

Privatisation was supposed to dynamise the State-owned backmarkers of British business. Even the kindliest readings of events at British Airways and other conspicuous cases give the lie to that silly theory. The sell-offs certainly dynamised the wealth of top management. Another silly theory was that a flood of superior performance would follow this financial stimulus. Fat chance.

Britain's willy-nilly post-industrial phase is thus part of a wider phenomenon. In the days when inefficient manufacturing giants stalked the land, many and convincing were the diagnoses and doom-laden were most of the prognoses. First, it was alleged, anybody with brains went into the City and services, not factories. The exceptions lacked enough excellent education in management, engineering and science. And they faced a solid phalanx of deadly enemies.

There were the ghastly unions obstructing any kind of progress (an excuse which lost all currency post-Thatcher). Then, Government didn't understand business and continually got in its way. Third, the City, with its arrant and arrogant short-termists, aided and abetted by an excess of accountants, held managers' noses to the grindstone of quarterly earnings reports and treated long-term plans with amused disdain.

Fourth, society itself stood arraigned - indifferent to economics, uninterested in managerial performance (in private and public sectors alike), far more enthused by the distractions of consumer society. The Thatcherised unions apart, there's some truth in all the above, but not nearly enough to explain the failure of Britain to spawn a Sony, a Nokia, an Intel, or a BMW, etc.

Can the answer be that Brits are simply no better at managing than at tennis? That management ability is just not in the national gene pool? Merely to state this proposition is to expose its utter nonsense. How could natural selection have achieved this result? Anybody who tours British companies must be well impressed by the quality and quantity of managers on display.

The showcases, however, are seldom large corporations. As I found on recent visits sponsored by the East of England Development Authority, the managerial running is being made by firms whose employment is numbered in the hundreds, not the hundreds of thousands. Successes like ARM (the world's dominant creator of microcircuits for mobile phones, etc.) have created their own fresh cultures - democratic, ambitious and self-improving - rather than struggling with stale, inherited ways and means.

The cultural obstacles placed before progressive-minded managers in established firms remain formidable, starting with the stultifying, US-style supremacy awarded to CEOs. In its top-down mindset, industry is only mirroring the centralising, father-knows-best, command-and-control behaviours of Government - never more obvious than under the Blairites. In either context, the system militates against the managerial excellence it purports to encourage.

When you take off the lid, the internal workings, even of one-time monuments to exalted managerial reputations, can beggar the most critical imaginations. Did the great Shell really falsify its oil reserves over many years, with top people conniving at, instead of jumping on, the deceit?Did the mighty Marks & Spencer actually allow massive leadership on all retailing counts to deteriorate year-by-year into public naming and shaming?

Yes, they did. And the tragedy is that these two organizations, like all those disappeared or dwindled manufacturers, recruited and 'developed' thousands of bright and energetic young people who could have stopped the rot and created their own economic miracles - like my East Anglians. Smaller and better beats big and blundering every time.