1
00:00:04,800 --> 00:00:08,680
'In a high security compound
in north-west England

2
00:00:08,680 --> 00:00:12,680
'is a machine that mankind
has only been able to dream about.

3
00:00:13,280 --> 00:00:16,160
'And I'm being allowed to see it.

4
00:00:16,160 --> 00:00:19,040
'The building I'm going to
is anonymous.

5
00:00:19,040 --> 00:00:22,760
'Inside is a project extraordinary,

6
00:00:22,760 --> 00:00:25,280
'intriguing and extremely hi-tech.

7
00:00:27,320 --> 00:00:33,160
'Many of us think that Britain had
a great industrial past,
but today we make nothing.

8
00:00:34,600 --> 00:00:38,440
'But behind this door is something
that disproves all that

9
00:00:38,440 --> 00:00:41,240
'and it's made in Britain.'

10
00:00:41,240 --> 00:00:43,000
What...

11
00:00:47,080 --> 00:00:51,360
'This is called the Mantis, the
world's first autonomous aircraft.

12
00:00:51,360 --> 00:00:53,360
'It isn't a drone.

13
00:00:53,360 --> 00:00:59,440
'There's no-one on the ground
controlling it. It thinks
for itself, decides for itself

14
00:00:59,440 --> 00:01:01,880
'and flies itself.'

15
00:01:01,880 --> 00:01:08,120
I was expecting something
that was a kind of oversized
model aeroplane, but...

16
00:01:08,120 --> 00:01:12,160
It's just miles, miles bigger
than I had pictured it.

17
00:01:12,160 --> 00:01:18,160
'It paves the way for
a science fiction future
of pilotless airliners

18
00:01:18,160 --> 00:01:21,000
'and driverless cars.

19
00:01:21,000 --> 00:01:25,600
'But will technology like this
finance Britain's future?

20
00:01:27,840 --> 00:01:31,680
'For years, we thought the City
could keep our economy growing

21
00:01:31,680 --> 00:01:36,720
'and that borrowing and spending
was more important
than making things.

22
00:01:36,720 --> 00:01:39,280
'Then came the Crash.

23
00:01:39,280 --> 00:01:42,320
'Britain emerged burdened with debt

24
00:01:42,320 --> 00:01:46,280
'and unsure how to rebuild
its economy.

25
00:01:46,280 --> 00:01:50,120
'Now at this critical moment
in Britain's story,

26
00:01:50,120 --> 00:01:54,520
'it's time to ask what should we be
doing to pay our way in the world.'

27
00:01:54,520 --> 00:02:00,680
People understand the importance
of manufacturing and that making
things is good for the economy.

28
00:02:00,680 --> 00:02:03,640
'Although we invented
mass production,

29
00:02:03,640 --> 00:02:07,520
'are we now being beaten at our
own game by countries like China?

30
00:02:08,560 --> 00:02:13,680
'I've travelled to the heart
of their economy and I'll challenge
assumptions and myths,

31
00:02:13,680 --> 00:02:17,880
'such as we're losing out
to the Chinese manufacturing giant.'

32
00:02:17,880 --> 00:02:22,560
Could you have survived
if you hadn't moved to China?
Absolutely no, no, no.

33
00:02:22,560 --> 00:02:28,600
'Nations often define their economic
success by the things they make.

34
00:02:30,800 --> 00:02:34,440
'In Britain, we're better at it
than you might think.

35
00:02:34,440 --> 00:02:39,360
'You might be surprised to learn
we're the seventh biggest
manufacturer in the world,

36
00:02:39,360 --> 00:02:45,000
'but to pay for all our imports,
we need manufacturing
to get bigger still.

37
00:02:45,000 --> 00:02:47,840
'The stakes are high.'

38
00:02:47,840 --> 00:02:51,520
You must be a bit scared.
I mean, it's... Scared?

39
00:02:52,720 --> 00:02:55,880
I'm an entrepreneur.
Why would I be scared?

40
00:02:55,880 --> 00:03:02,600
'In this series, I'll bust the myth
that we make little or nothing
and show you how industrious we are.

41
00:03:02,600 --> 00:03:06,920
'I'll be looking at the three great
engines that power our economy,

42
00:03:06,920 --> 00:03:10,840
'how they're connected
and the challenges they face.

43
00:03:10,840 --> 00:03:14,520
'The knowledge sector -
what we invent,

44
00:03:14,520 --> 00:03:17,920
'services - what we run

45
00:03:17,920 --> 00:03:21,880
'and first, manufacturing -
what we make.'

46
00:03:21,880 --> 00:03:26,920
At difficult times like these,
it's easy to be overcome
by economic gloom.

47
00:03:26,920 --> 00:03:29,960
After all, we've lots of problems
to resolve.

48
00:03:29,960 --> 00:03:33,000
But there are plenty of reasons
to be confident

49
00:03:33,000 --> 00:03:35,320
in our abilities and in our future.

50
00:03:35,320 --> 00:03:40,720
So what is it we do well?
What do we do wrong? And how
do we pay our way in the world?

51
00:04:02,760 --> 00:04:06,440
'Who says we don't make anything
any more?

52
00:04:07,960 --> 00:04:13,520
'Love it or hate it,
this Typhoon shows
that when we put our minds to it,

53
00:04:13,520 --> 00:04:17,040
'we can do engineering
as well as anyone.

54
00:04:17,040 --> 00:04:21,440
'At £75 million each,
they're expensive,

55
00:04:21,440 --> 00:04:25,680
'but the Typhoon is arguably
the best military jet in the world.

56
00:04:25,680 --> 00:04:32,320
'It's the product of a four-nation
consortium, but BAE Systems
in Britain is assembling about 200

57
00:04:32,320 --> 00:04:35,720
'and makes some
of the most complex parts.

58
00:04:38,640 --> 00:04:42,520
'In the global businesses
of aeroplanes and defence,

59
00:04:42,520 --> 00:04:47,560
'or arms if you prefer,
Britain punches above its weight
in the world.

60
00:04:49,560 --> 00:04:54,840
'I've been invited
to join a test flight. Like a lot
of British industry right now,

61
00:04:54,840 --> 00:05:00,960
'BAE is working hard to sell more
overseas and that means
constant refinement of the plane.'

62
00:05:00,960 --> 00:05:05,240
The second test point is Item 7
which is air-to-air gun attack.

63
00:05:05,240 --> 00:05:08,560
Nat, if you can monitor
the director gunsight

64
00:05:08,560 --> 00:05:13,920
and assess the aiming pipper,
its stability and accuracy
about the target position...

65
00:05:13,920 --> 00:05:17,920
'Nat Makepeace is
the company's chief test pilot.'

66
00:05:17,920 --> 00:05:22,480
First thing, what frequency
are we working? 36. 36, perfect.

67
00:05:25,480 --> 00:05:30,480
'Everything about the Typhoon
has been designed to be hi-tech
and high value.

68
00:05:30,480 --> 00:05:34,520
'It's a quarter of a million pounds
just for the helmet.'

69
00:05:36,600 --> 00:05:39,440
So what do we want
from manufacturing?

70
00:05:39,440 --> 00:05:43,480
You want speed, agility,
sophistication, ambition.

71
00:05:43,480 --> 00:05:47,720
Is this the single object
that encapsulates them all?

72
00:05:50,240 --> 00:05:53,760
Grab the handle round here
and just... That then goes in.

73
00:05:55,160 --> 00:05:59,800
'BAE Systems is the second biggest
defence contractor in the world,

74
00:05:59,800 --> 00:06:06,600
'employing 33,000 people in this
country and trading with 8,000 other
British companies as suppliers.'

75
00:06:06,600 --> 00:06:09,160
See you guys later. Thanks a lot.

76
00:06:09,160 --> 00:06:15,000
'Only a fifth of its business comes
from the British government.
The rest comes from overseas.

77
00:06:15,000 --> 00:06:21,680
'Britain is very dependent on
BAE Systems and other manufacturers
to generate those export revenues.'

78
00:06:23,320 --> 00:06:29,240
Climbing to flight level eight-zero,
to flight level one-eight-zero.
'Two-six departure.'

79
00:06:39,760 --> 00:06:43,400
Oh, my God! Oh! God!

80
00:06:45,840 --> 00:06:47,960
Ohhh!

81
00:06:48,960 --> 00:06:51,120
Whoa!

82
00:06:51,120 --> 00:06:52,960
God!

83
00:06:56,240 --> 00:07:00,520
That's Blackpool Airport on the right
there. You can see the tower.

84
00:07:02,760 --> 00:07:05,440
ENGINE ROARS

85
00:07:06,920 --> 00:07:12,560
Now, obviously, you can't go
and buy one of these at a showroom
on your high street.

86
00:07:12,560 --> 00:07:19,280
And perhaps because you don't get
to see it very often, perhaps
because it's quite controversial,

87
00:07:19,280 --> 00:07:25,280
it's just one of those
under-recognised manufacturing
and engineering achievements.

88
00:07:25,280 --> 00:07:28,920
'But how much
of an industrial force are we?

89
00:07:28,920 --> 00:07:32,960
'To answer that, you need
an overview of our entire economy.

90
00:07:33,960 --> 00:07:38,400
'Well, right across Britain
and all advanced nations,

91
00:07:38,400 --> 00:07:41,040
'it's services that dominate.

92
00:07:41,040 --> 00:07:45,360
'That's everything from banking
to retailing

93
00:07:45,360 --> 00:07:48,160
'to distribution.

94
00:07:48,160 --> 00:07:53,560
'Services now account
for three-quarters
of the entire economy.

95
00:07:56,560 --> 00:08:01,960
'Manufacturing is 12% of the
economy, a vitally important sector.

96
00:08:01,960 --> 00:08:07,000
'It's bigger than financial services
and accounts
for most of our exports.

97
00:08:07,000 --> 00:08:11,200
'We have a lot of engineering
and food and drink manufacturing.

98
00:08:11,200 --> 00:08:14,760
'We're also big
in chemicals and pharmaceuticals,

99
00:08:14,760 --> 00:08:17,680
'but we have let
a lot of our factories go.

100
00:08:17,680 --> 00:08:22,720
'While we do sell enough overseas
to pay for the vast bulk
of our imports,

101
00:08:22,720 --> 00:08:27,760
'there is still a gap
and we've been relying on borrowing
to help plug it.

102
00:08:27,760 --> 00:08:30,000
'That can't go on.'

103
00:08:36,040 --> 00:08:42,200
It's not just me having a white
knuckle ride. Our economy has had
a white knuckle ride as well.

104
00:08:42,200 --> 00:08:48,040
Right now we need to start paying
off debts, we need to export more,
we need to import less.

105
00:08:48,040 --> 00:08:53,400
That means we're going
to be relying more and more
on our manufacturing sector.

106
00:08:54,400 --> 00:08:59,680
But are manufacturers capable
of exporting us out of trouble?

107
00:08:59,680 --> 00:09:02,800
It won't be easy,
but I think they are.

108
00:09:02,800 --> 00:09:08,960
The very forces which made us
an industrial power in the first
place will carry us through now.

109
00:09:18,800 --> 00:09:25,000
We're in a period of
economic soul-searching, regretting
the loss of our industrial past.

110
00:09:27,720 --> 00:09:32,840
But Derbyshire's Derwent Valley,
birthplace of
the Industrial Revolution,

111
00:09:32,840 --> 00:09:35,840
provides clues
for our industrial future.

112
00:09:35,840 --> 00:09:39,560
It was here that we British
invented mass production

113
00:09:39,560 --> 00:09:43,320
and laid the foundations
of the wealth we enjoy today.

114
00:09:43,320 --> 00:09:47,320
It was probably our greatest
contribution to mankind.

115
00:09:52,760 --> 00:10:00,160
What drove the economy
to such great things back then were
the same forces that drive it today.

116
00:10:00,160 --> 00:10:05,200
Three principles in particular
determine our economic direction
of travel.

117
00:10:05,200 --> 00:10:08,040
Now, the first rule
of successful nations

118
00:10:08,040 --> 00:10:12,440
is always to move into the highest
value activities they can find.

119
00:10:12,440 --> 00:10:16,840
And that means specialising in
things they're particularly good at,

120
00:10:16,840 --> 00:10:20,480
hopefully, things that other people
can't do so well.

121
00:10:20,480 --> 00:10:26,840
And with some great technological
innovations around the time
of the Industrial Revolution,

122
00:10:26,840 --> 00:10:29,320
that's exactly what they did here.

123
00:10:29,320 --> 00:10:33,240
Because it was more profitable
than agriculture,

124
00:10:33,240 --> 00:10:36,840
it was towards more industry
that our economy moved.

125
00:10:36,840 --> 00:10:42,440
Those early cotton industrialists
also followed a second rule
of successful economies -

126
00:10:42,440 --> 00:10:45,800
use the resources at hand.

127
00:10:45,800 --> 00:10:50,280
What you had here was that phenomenal
water resource for the power

128
00:10:50,280 --> 00:10:52,920
and as well you've got the people.

129
00:10:52,920 --> 00:10:57,320
You've got lead mining at Cromford,
you've got nail-making at Belper.

130
00:10:57,320 --> 00:11:03,520
Those are two industries where you
have men working, but you don't tend
to have women and children.

131
00:11:03,520 --> 00:11:08,320
And the mills were able to take
the women and children and use them.

132
00:11:08,320 --> 00:11:14,480
It was a brutal business,
but we developed those factories on
the back of cheap labour and energy.

133
00:11:14,480 --> 00:11:19,120
And that allowed Britain
to become a manufacturing giant.

134
00:11:21,120 --> 00:11:24,960
When this mill was built
in the early 20th century,

135
00:11:24,960 --> 00:11:30,480
we made two-thirds
of the world's cotton
and over half the world's ships.

136
00:11:31,560 --> 00:11:34,960
But there is
a vital third principle too

137
00:11:34,960 --> 00:11:39,200
that has governed our economy
since the Industrial Revolution.

138
00:11:39,200 --> 00:11:44,240
You hardly need me to tell you
that with all the wealth created
around here,

139
00:11:44,240 --> 00:11:47,080
Britain comfortably became
top nation.

140
00:11:47,080 --> 00:11:49,920
But there is
a very important lesson.

141
00:11:49,920 --> 00:11:54,800
The world changes, others catch up
and you can't cling on.

142
00:11:54,800 --> 00:11:59,320
Successful nations have to be
flexible and adaptable.

143
00:11:59,320 --> 00:12:03,440
Ever since
the Industrial Revolution,

144
00:12:03,440 --> 00:12:07,520
we've got rich by changing
as the world changes.

145
00:12:07,520 --> 00:12:12,640
We've let our economy evolve,
moving on to higher value activities

146
00:12:12,640 --> 00:12:15,680
and letting go
of lower value industries.

147
00:12:17,840 --> 00:12:23,960
Leeds, for example, once grew
prosperous from the rise
of textiles and clothing,

148
00:12:23,960 --> 00:12:26,160
then saw it all vanish.

149
00:12:29,160 --> 00:12:31,800
It's been a traumatic process,

150
00:12:31,800 --> 00:12:37,320
but the economy benefited
from the higher value enterprise
that followed.

151
00:12:40,800 --> 00:12:47,320
One family firm which tells
the story of how good can come
out of bad is Berwin & Berwin,

152
00:12:47,320 --> 00:12:52,360
a suit manufacturing company
founded in Leeds a century ago.

153
00:13:00,400 --> 00:13:03,720
It's like stepping back
into the 1950s.

154
00:13:03,720 --> 00:13:06,680
The Chairman is Malcolm Berwin.

155
00:13:06,680 --> 00:13:10,720
So what was the heyday
of textiles and clothing in Leeds?

156
00:13:10,720 --> 00:13:18,480
I would say probably the 1950s
was the peak when there were 30,000
people working in clothing in Leeds.

157
00:13:18,480 --> 00:13:23,680
In Leeds alone? In Leeds alone.
The street outside where we are now,

158
00:13:23,680 --> 00:13:28,720
you could go up and down there
and on right and left
were clothing factories.

159
00:13:28,720 --> 00:13:35,280
But all over the city, the centre
of the city, some of the outskirts
of the city, were clothing factories.

160
00:13:38,120 --> 00:13:42,440
'But by the '80s and '90s,
the clothing industry had changed.

161
00:13:42,440 --> 00:13:45,120
'It was time to move on.

162
00:13:45,120 --> 00:13:48,440
'Britain was more affluent
and expensive.

163
00:13:48,440 --> 00:13:52,880
'Poorer countries could now produce
clothes effectively and cheaply.

164
00:13:52,880 --> 00:13:59,200
'They were using the resources they
had to hand - low-cost labour -
to supply shops in Britain.

165
00:14:00,440 --> 00:14:07,080
'As high street prices tumbled,
British clothing manufacturers
were hit hard.

166
00:14:07,080 --> 00:14:12,120
'It was the simple expression
of the rule that
you constantly need to adapt,

167
00:14:12,120 --> 00:14:17,160
'but suit-maker Simon Berwin
tried to resist,
despite the difficulties.'

168
00:14:17,160 --> 00:14:22,200
You noticed the profits
were diminishing because you had
to squeeze the margin

169
00:14:22,200 --> 00:14:28,240
to compete against the lower priced
competition? To keep orders we had,
we had to keep reducing the price.

170
00:14:28,240 --> 00:14:34,680
Because we were under pressure, we
couldn't invest in new machinery, so
we couldn't move the product forward.

171
00:14:34,680 --> 00:14:41,560
It was a double-edged sword. Maybe
wrongly we felt proud that we were
surviving, but survival isn't enough.

172
00:14:44,080 --> 00:14:47,920
The change was painful
for workers too.

173
00:14:47,920 --> 00:14:52,960
Angie Butler had been travelling
across the city to work
in Berwins' factory

174
00:14:52,960 --> 00:14:57,000
and had already been made redundant
by another clothing company.

175
00:14:57,000 --> 00:15:01,880
Over three decades, we lost almost
three million manufacturing jobs.

176
00:15:01,880 --> 00:15:06,200
As factories closed,
whole communities were affected.

177
00:15:06,200 --> 00:15:11,600
You'd seen all the tailoring firms
just slowly declining and going down

178
00:15:11,600 --> 00:15:15,640
and you think, "What if it happens
here, what are you going to do?"

179
00:15:15,640 --> 00:15:18,080
She was right to fear the worst.

180
00:15:18,080 --> 00:15:24,640
At the start of the new century,
the Berwin factory joined thousands
of others and finally closed.

181
00:15:24,640 --> 00:15:27,640
A very emotional
and difficult period,

182
00:15:27,640 --> 00:15:32,360
my father saying goodbye to people
who he had known for 30 and 40 years,

183
00:15:32,360 --> 00:15:36,200
and many people not really knowing
what the future held.

184
00:15:39,400 --> 00:15:42,440
What about the day
they came and told you?

185
00:15:42,440 --> 00:15:45,040
The day... Quite a shock.

186
00:15:45,040 --> 00:15:47,080
Quite a shock.

187
00:15:48,080 --> 00:15:51,280
Are people bitter about it,
do you think?

188
00:15:51,280 --> 00:15:54,800
I think one or two would be,
do you know what I mean?

189
00:15:54,800 --> 00:15:58,760
Because you gave your heart
and soul and worked hard for a firm.

190
00:15:58,760 --> 00:16:04,760
The upsetting thing was seeing
the headlines in the newspapers
the following day,

191
00:16:04,760 --> 00:16:09,720
when it spelt out that we were
the last clothing factory
to close in Leeds.

192
00:16:09,720 --> 00:16:12,480
You were the last?
Absolutely the last.

193
00:16:17,480 --> 00:16:19,520
Yeah, it was sad.

194
00:16:23,600 --> 00:16:29,480
It hasn't just been textiles
and clothes falling victim
to foreign competition.

195
00:16:29,480 --> 00:16:32,920
Shipbuilding, televisions,
shoemaking, toys -

196
00:16:32,920 --> 00:16:36,960
the roll call of British industrial
decline seems endless.

197
00:16:36,960 --> 00:16:42,960
Great British industries
have risen and have fallen
by those three simple rules -

198
00:16:42,960 --> 00:16:48,800
that you use the resources at your
disposal, put them in the highest
value activities you can find

199
00:16:48,800 --> 00:16:52,640
and you constantly adapt
as the world changes around you.

200
00:16:52,640 --> 00:16:58,880
As things do change, it can be
extremely painful, but was it all
bad that industries moved abroad?

201
00:16:58,880 --> 00:17:05,640
I don't think so. In many respects,
it strengthened the UK economy
and made a lot of people richer.

202
00:17:37,040 --> 00:17:41,880
'This is where much
of our manufacturing has come -

203
00:17:41,880 --> 00:17:43,840
'China.

204
00:17:47,840 --> 00:17:53,920
'By taking on low value work,
China has benefited
and it's been good for us too.

205
00:17:53,920 --> 00:17:57,360
'The same principles apply here
as to us.

206
00:17:57,360 --> 00:18:01,400
'They're using the one great
resource to hand - the people.

207
00:18:07,200 --> 00:18:12,240
'Shanghai - a megacity
of 20 million people.

208
00:18:12,240 --> 00:18:16,560
'It's the hub of China's
Industrial Revolution.

209
00:18:16,560 --> 00:18:22,280
'This region has been so successful,
it's already richer
than parts of the UK.

210
00:18:22,280 --> 00:18:26,320
'And it's becoming more expensive
to manufacture here.

211
00:18:33,920 --> 00:18:37,480
'But outside Shanghai,
it's a different story.

212
00:18:40,600 --> 00:18:45,120
'Every year, some 20 new cities
crammed with factories and workers

213
00:18:45,120 --> 00:18:49,040
'are being constructed
all over this vast country.

214
00:18:49,040 --> 00:18:53,480
'Their growth is often based
on foreign technology and know-how.'

215
00:18:53,480 --> 00:18:55,520
Just a few more steps.

216
00:18:55,520 --> 00:19:01,800
'Longkou is just one of them
and I've been told
of an unmissable view.'

217
00:19:07,920 --> 00:19:12,240
OK, so there's not much of a view.
This is the afternoon mist.

218
00:19:12,240 --> 00:19:15,800
It takes over from the morning mist
each lunchtime.

219
00:19:26,280 --> 00:19:30,400
'This ancient Buddha is
a whole ten years old.

220
00:19:30,400 --> 00:19:33,920
'In fact,
everything is new around here.

221
00:19:34,920 --> 00:19:39,560
'35 years ago, this was just
a small rural community.

222
00:19:42,720 --> 00:19:48,120
'Longkou is now a sprawling
metropolis of 800,000 people

223
00:19:48,120 --> 00:19:51,760
'which few of us
will ever have heard of.'

224
00:19:51,760 --> 00:19:55,800
China's whole industrial development
has been astonishingly fast.

225
00:19:55,800 --> 00:20:00,840
What they've done in two decades,
it took Britain two centuries
to achieve. Why?

226
00:20:00,840 --> 00:20:05,880
They've got this very good
"get rich quick" scheme -
you import the technology.

227
00:20:05,880 --> 00:20:12,520
They haven't had to invent all the
processes they're using. Of course,
it's served them very well indeed.

228
00:20:12,520 --> 00:20:16,880
But from where have they imported
some of these processes? Leeds.

229
00:20:21,560 --> 00:20:28,680
It turns out that suit manufacturer
Berwin didn't die when they closed
their Yorkshire plant.

230
00:20:28,680 --> 00:20:31,840
They were reborn in China.

231
00:20:31,840 --> 00:20:35,840
Berwins' new suit factory
is the biggest in the world,

232
00:20:35,840 --> 00:20:42,520
making half a million outfits a year
for the company's customers on
the British high street and beyond.

233
00:20:43,520 --> 00:20:49,080
Now, the workers here are
on piece rates, but I'm told
they earn about £1.50 an hour,

234
00:20:49,080 --> 00:20:51,480
a quarter of our minimum wage.

235
00:20:51,480 --> 00:20:54,200
And they do a six-day week.

236
00:20:56,200 --> 00:21:00,200
'The move to China has slashed
Berwins' labour costs.

237
00:21:00,200 --> 00:21:05,920
'According to factory manager
John Fleming, that's the key
to the company's resurrection.'

238
00:21:05,920 --> 00:21:11,120
Don't you think it's amazing that
the entire labour cost of the suit

239
00:21:11,120 --> 00:21:14,880
is less than four quid
to assemble a suit?

240
00:21:14,880 --> 00:21:17,920
Yeah, but the labour cost
is only a small part

241
00:21:17,920 --> 00:21:22,080
of the total cost of producing
a suit and getting it back to the UK.

242
00:21:22,080 --> 00:21:29,040
But if it's a small part, why would
you choose where the factory is just
on the basis of the labour cost?

243
00:21:29,040 --> 00:21:33,080
Right, we're saying here the labour
cost is maybe £1.50 an hour.

244
00:21:33,080 --> 00:21:36,920
What is it in the UK? Four times
that, minimum wage? Yeah.

245
00:21:36,920 --> 00:21:42,080
So your suit costs are going from £4
a suit labour charge to £16 a suit.

246
00:21:42,080 --> 00:21:48,480
That's not that much, is it, on
a suit? £12 a suit, half a million
suits a year, six million quid.

247
00:21:48,480 --> 00:21:52,920
That's the difference between being
in business or out of business.

248
00:21:52,920 --> 00:21:59,520
'The Berwins say investment in new
machinery and skills delivers better
quality than they managed in Leeds.

249
00:21:59,520 --> 00:22:05,240
'As for the Chinese, they're simply
following the same rules
that led to our success.

250
00:22:05,240 --> 00:22:10,960
'Our low value work represents
high value work here and
it makes use of abundant resources,

251
00:22:10,960 --> 00:22:13,600
'in this case, cheap labour.'

252
00:22:16,760 --> 00:22:22,160
You might be feeling suit envy,
wishing we were as good at this
as they are.

253
00:22:22,160 --> 00:22:27,720
But we are as good at this
as they are. They don't do it
because they're better at it,

254
00:22:27,720 --> 00:22:33,920
but because they're not that good
at anything else. It's a sign
of their lack of other opportunities

255
00:22:33,920 --> 00:22:38,440
which makes them specialise
in what is relatively low-paid work.

256
00:22:51,400 --> 00:22:57,640
To most Chinese living out
in the countryside, the factory pay
must look highly attractive.

257
00:22:57,640 --> 00:23:01,160
But it seems poor to us.

258
00:23:01,160 --> 00:23:06,640
We could compete
if we paid ourselves as little,
but we wouldn't want to.

259
00:23:10,160 --> 00:23:15,080
Now, you take this four-lane highway
a mile or two from the factory

260
00:23:15,080 --> 00:23:17,920
and you come to the end of town.

261
00:23:17,920 --> 00:23:24,360
Suddenly, the road narrows.
It's like a time portal into
a different China - the countryside,

262
00:23:24,360 --> 00:23:27,920
the 20th century China
from the 21st here.

263
00:23:27,920 --> 00:23:33,960
What you have to remember is that
the vast bulk of people actually
live in that China, not this one.

264
00:23:33,960 --> 00:23:38,040
The vast bulk of them are on incomes
of less than three dollars a day.

265
00:23:42,040 --> 00:23:46,760
With so many people, no wonder
China has so much to export.

266
00:23:47,760 --> 00:23:53,480
Every one of these containers
in Shanghai will be crammed full
of cheap goods,

267
00:23:53,480 --> 00:23:55,520
some heading our way.

268
00:23:56,920 --> 00:23:58,960
But in my view,

269
00:23:58,960 --> 00:24:04,800
they're not so much
a sign of China's strength,
more of its limitations.

270
00:24:10,360 --> 00:24:15,040
Seven of the world's
ten busiest ports are in China.

271
00:24:15,040 --> 00:24:18,440
That's measured by the tonnage
of cargo handled.

272
00:24:18,440 --> 00:24:23,280
Yes, more weight is exported
from China than anywhere else
in the world.

273
00:24:23,280 --> 00:24:28,600
It is impossible
not to be impressed,
but we mustn't be afraid of that.

274
00:24:28,600 --> 00:24:33,560
We must never confuse the volume of
what China produces with the value.

275
00:24:35,640 --> 00:24:40,200
'The truth is, China is still
a relatively poor country,

276
00:24:40,200 --> 00:24:45,360
'making cheap stuff,
most of which it's not economic
for us to manufacture any more.

277
00:24:45,360 --> 00:24:48,880
'And we've reaped huge benefits.

278
00:24:54,600 --> 00:24:57,080
'Back at Berwins' in Leeds,

279
00:24:57,080 --> 00:25:04,000
'their former factory is now
a warehouse, stocked with suits
they've had made in China.

280
00:25:04,000 --> 00:25:08,960
'Should we regret the fact
we import suits,
rather than manufacture them?

281
00:25:08,960 --> 00:25:13,680
'That might depend on whether
we can find replacement jobs.

282
00:25:13,680 --> 00:25:20,800
'Angie Butler has. Now, like almost
80% of us, she works in services.
She's Berwins' warehouse manager.'

283
00:25:20,800 --> 00:25:26,320
Your old colleagues here,
the ones on the factory floor,
what are they up to now?

284
00:25:26,320 --> 00:25:30,600
Some of them have gone in to
completely different jobs

285
00:25:30,600 --> 00:25:36,640
as there's not many tailoring firms
around now, so they've gone in to
different jobs, doing really well.

286
00:25:36,640 --> 00:25:39,280
Most have found something? Yes.

287
00:25:39,280 --> 00:25:43,000
I would say
the majority of them have, yeah,

288
00:25:43,000 --> 00:25:47,560
which I'm really pleased about. It's
nice when you hear something good.

289
00:25:48,960 --> 00:25:52,800
'Not all displaced industrial
workers have been so lucky.

290
00:25:52,800 --> 00:25:59,640
'But here's the thing.
Since China began manufacturing
for us in a big way a decade ago,

291
00:25:59,640 --> 00:26:03,680
'Britain has found
plenty of other things to do.

292
00:26:03,680 --> 00:26:08,040
'In fact, a million more people
are in work.

293
00:26:11,840 --> 00:26:18,480
'As for Simon Berwin and daughter
Kate, things have never been
better for their family firm.'

294
00:26:18,480 --> 00:26:20,280
It fits very well.

295
00:26:20,280 --> 00:26:26,520
'At London Fashion Week,
their men's outfits are on parade
in designer Paul Costelloe's show.

296
00:26:28,120 --> 00:26:31,360
'And since having every stitch
made abroad,

297
00:26:31,360 --> 00:26:37,960
'turnover has gone up by ten times
and theirs has become one of the
biggest suit companies in Europe.'

298
00:26:39,440 --> 00:26:43,880
Could you have survived if
you hadn't made the move to China?

299
00:26:43,880 --> 00:26:47,600
Absolutely not.
Absolutely no, no, no.

300
00:26:47,600 --> 00:26:53,760
There is no way that the consumer
and the retailer will pay the wages
that are required in this country.

301
00:26:53,760 --> 00:26:58,800
Whether that's right or wrong,
it's not for me to comment,
but that is the real world.

302
00:27:03,800 --> 00:27:08,480
'And crucially, although Berwins'
suits may be made in China,

303
00:27:08,480 --> 00:27:12,360
'the Chinese only get
about 20% of the retail price.

304
00:27:12,360 --> 00:27:18,400
'Most of the rest of the money
stays in Britain with the designers,
transport companies, shops

305
00:27:18,400 --> 00:27:20,800
'and, of course, the Berwins.

306
00:27:25,880 --> 00:27:30,120
'And there are other benefits
which most of us can share.

307
00:27:30,120 --> 00:27:36,080
'Berwins' London showroom is
crammed with suits for the British
high street, all made abroad.

308
00:27:36,080 --> 00:27:41,640
'They claim these suits are
half the price they would be,
had they been made here.

309
00:27:41,640 --> 00:27:47,600
'We've got inflation now,
but we've been enjoying
falling prices for a lot of goods.'

310
00:27:50,320 --> 00:27:54,440
Of course, there are downsides
to moving production offshore,

311
00:27:54,440 --> 00:27:58,960
but for most British consumers, the
China effect has been considerable

312
00:27:58,960 --> 00:28:02,000
and has been like
an invisible pay rise.

313
00:28:02,000 --> 00:28:05,040
We're used to prices going up
year after year,

314
00:28:05,040 --> 00:28:09,520
but the things made in China have
become considerably more affordable.

315
00:28:09,520 --> 00:28:14,960
The price of clothing, for example,
has fallen by a quarter
in the last 15 years.

316
00:28:17,240 --> 00:28:21,560
The price of audiovisual equipment
like radios has fallen 80%.

317
00:28:21,560 --> 00:28:25,400
Items like toys and cameras
are down 30%.

318
00:28:25,400 --> 00:28:30,440
The drop in the relative price
of manufactured goods
that we've witnessed

319
00:28:30,440 --> 00:28:35,480
is one of those economic changes
that only occurs
every few generations.

320
00:28:37,160 --> 00:28:43,800
No transition is easy. We lost
thousands of manufacturing jobs
every month for many years.

321
00:28:43,800 --> 00:28:47,200
But when we come to look back
on what's happened,

322
00:28:47,200 --> 00:28:52,320
we won't regret sending
low value production to China.
We can't do everything.

323
00:28:52,320 --> 00:28:57,840
Far better for us to concentrate
on the high value production
we've kept for ourselves.

324
00:28:59,360 --> 00:29:04,400
You see,
while low value manufacturing
has been journeying offshore,

325
00:29:04,400 --> 00:29:08,440
the manufacturing that stayed behind
has been on a journey too -

326
00:29:08,440 --> 00:29:12,000
towards smaller,
higher value sectors.

327
00:29:13,000 --> 00:29:17,640
I will tell you why we might have
gone too far along this road,

328
00:29:17,640 --> 00:29:24,280
but the really important point is
that this move into more lucrative
sectors was, unquestionably,

329
00:29:24,280 --> 00:29:28,320
the right direction
for the economy to have taken.

330
00:29:34,600 --> 00:29:39,720
'This is high-value production
and it's what Britain does best.'

331
00:29:41,760 --> 00:29:46,600
Lovely. 'McLaren is known
for success in motor racing,

332
00:29:46,600 --> 00:29:51,240
'but this is the first sports car
of their own for the general market,

333
00:29:51,240 --> 00:29:54,240
'if you have £167,000 to spare.'

334
00:29:56,000 --> 00:30:00,440
What I'll do now is we'll do a lap.
OK. See what the car can do.

335
00:30:00,440 --> 00:30:05,800
OK, this is...
Showing off. This is showing off
its performance potential.

336
00:30:07,200 --> 00:30:13,040
'Most of these
are expected to be sold abroad
and that's just what we need

337
00:30:13,040 --> 00:30:17,800
'as right now we're exporting too
little to pay for all our imports.'

338
00:30:34,360 --> 00:30:36,880
The suspension...

339
00:30:37,920 --> 00:30:42,240
Understanding braking and turning
and accelerating...

340
00:30:51,000 --> 00:30:54,800
You don't need to sell the car!
You just need to...

341
00:30:56,800 --> 00:30:59,320
..give people...a ride!

342
00:31:08,360 --> 00:31:12,160
Did you mean to come off
the track there? Well...

343
00:31:20,720 --> 00:31:27,440
'To set up their new
sports car business, develop the car
and build a new factory,

344
00:31:27,440 --> 00:31:30,280
'McLaren is spending £800 million.'

345
00:31:32,560 --> 00:31:37,400
That's one of the quickest laps
a car can do on that circuit.

346
00:31:38,720 --> 00:31:40,360
You OK?

347
00:31:40,360 --> 00:31:44,560
To think you could take that car
on the road.

348
00:31:44,560 --> 00:31:49,000
Did you enjoy that? Very, very much.
That is really quite...

349
00:31:49,000 --> 00:31:50,920
Ooh.

350
00:31:50,920 --> 00:31:53,960
'The ride IS breathtaking,

351
00:31:53,960 --> 00:31:57,560
'but so are the financial stakes.'
If it all fails,

352
00:31:57,560 --> 00:32:00,000
how bad is that for McLaren?

353
00:32:00,000 --> 00:32:05,360
Well, putting aside the financial
consequences of failure,

354
00:32:05,360 --> 00:32:09,640
which is always a very difficult pill
to swallow, we're a winning machine.

355
00:32:09,640 --> 00:32:15,280
But we've got to be as disciplined
and as focused as we are in Formula 1
and we should succeed.

356
00:32:20,440 --> 00:32:24,920
'So what does this discipline
and focus actually mean for McLaren?

357
00:32:24,920 --> 00:32:29,560
'It's about striving to be best and
high value in everything they do.

358
00:32:31,040 --> 00:32:35,240
'Even their Surrey headquarters
is not your usual factory.'

359
00:32:49,400 --> 00:32:50,440
Ooh.

360
00:32:59,480 --> 00:33:01,920
Not an oil smear

361
00:33:01,920 --> 00:33:03,880
in sight.

362
00:33:07,400 --> 00:33:09,440
All right!

363
00:33:11,920 --> 00:33:17,560
This is really a film set.
There's no factory
or any activity here at all.

364
00:33:21,000 --> 00:33:27,040
What was with the white corridor?
I came in through a long, white
corridor, went through a door -

365
00:33:27,040 --> 00:33:33,280
another white corridor.
So much of what comes into buildings
is brought in by humans,

366
00:33:33,280 --> 00:33:37,520
so we clean people's feet as they go
down different surface finishes.

367
00:33:37,520 --> 00:33:41,960
But we don't just do feet. We try
to do it with their minds as well.

368
00:33:41,960 --> 00:33:44,200
'Level number one.'

369
00:33:45,800 --> 00:33:51,080
Why expect to make a perfect product
in an imperfect environment?

370
00:33:52,040 --> 00:33:56,280
'So why has McLaren decided
to branch out from racing cars

371
00:33:56,280 --> 00:34:01,720
'to sports cars? It's all back
to the basic principles -
you use the skills you've got.

372
00:34:01,720 --> 00:34:06,600
'And in Britain we have years
of experience in motor racing.

373
00:34:06,600 --> 00:34:11,840
'At the start of the 20th century,
Britain had a speed limit of 20mph

374
00:34:11,840 --> 00:34:17,840
'and there was a fear that our
industry would fall behind unless
cars could be tested at speed.

375
00:34:17,840 --> 00:34:23,880
'So in 1907, the world's first
purpose-built motor racing circuit
was built at Brooklands,

376
00:34:23,880 --> 00:34:26,640
'just down the road from McLaren.

377
00:34:29,400 --> 00:34:34,360
'Two-thirds of Formula 1 teams
now build their cars in Britain.

378
00:34:34,360 --> 00:34:38,800
'Several universities have degree
courses in motor sport engineering.

379
00:34:38,800 --> 00:34:44,840
'The industry employs 25,000
engineers and it generates
huge export revenues, too.

380
00:34:49,400 --> 00:34:53,440
'McLaren has a turnover
of £250 million a year.

381
00:34:53,440 --> 00:34:57,880
'Now it plans to leverage the wealth
and expertise accrued from racing

382
00:34:57,880 --> 00:35:02,320
'to create more wealth
from sports car manufacture.'

383
00:35:03,280 --> 00:35:08,720
In five years' time,
we intend to have
a four times bigger turnover

384
00:35:08,720 --> 00:35:16,160
and comparable profitability
to those people who succeed
in this particular market.

385
00:35:16,160 --> 00:35:21,080
The driving force is to be the best
in the world, which means money.

386
00:35:21,080 --> 00:35:27,280
'The essence of high-value
production is in selling
small numbers at high prices.

387
00:35:27,280 --> 00:35:31,520
'McLaren will sell just 1,000 cars
in the first year,

388
00:35:31,520 --> 00:35:38,360
'but that's worth three times
Berwins' entire turnover
on all those foreign-made suits.

389
00:35:38,360 --> 00:35:42,400
'What McLaren does is the reverse
of the Chinese model.'

390
00:35:42,400 --> 00:35:48,640
The skill sets that exist
in our organisation and the
manufacturing technologies we have

391
00:35:48,640 --> 00:35:52,880
don't necessarily fit into
low-cost, high-volume products.

392
00:35:52,880 --> 00:35:57,520
They tend to be relatively low volume
with good margins.

393
00:35:57,520 --> 00:36:01,680
At the same time, by necessity, they
have to be world-leading products.

394
00:36:03,600 --> 00:36:09,080
'OK, this is really high-end stuff,
but the UK is a high-end economy.

395
00:36:09,080 --> 00:36:14,120
'Remember,
successful economies always try
to focus on the high value,

396
00:36:14,120 --> 00:36:20,160
'but there's a curious effect here.
As manufacturing gets more
successful over the decades,

397
00:36:20,160 --> 00:36:22,800
'the less we see of it.

398
00:36:22,800 --> 00:36:24,840
CLASSICAL MUSIC

399
00:36:28,440 --> 00:36:33,320
'Let me explain with the kind help
of a string quartet.

400
00:36:33,320 --> 00:36:37,960
'This piece by Haydn still takes
four people to play it,

401
00:36:37,960 --> 00:36:41,200
'just as it did 230 years ago,

402
00:36:41,200 --> 00:36:47,040
'but in our factories,
things get faster and more efficient
year by year.'

403
00:36:49,600 --> 00:36:55,840
The oddity is that
the better we get at manufacturing,
the fewer people we need to do it.

404
00:36:55,840 --> 00:37:00,280
No wonder you read headlines about
factory job losses all the time.

405
00:37:06,400 --> 00:37:12,640
'In the two decades
up to the recession, we manufactured
output worth 10% more

406
00:37:12,640 --> 00:37:15,480
'with 40% fewer workers.

407
00:37:17,000 --> 00:37:23,040
'As it gets more efficient,
manufacturing gets leaner
and less visible.'

408
00:37:26,240 --> 00:37:32,280
In fact, it's one of economics'
great paradoxes that the bits of
the economy that are most dynamic,

409
00:37:32,280 --> 00:37:37,200
like manufacturing, are sometimes
the ones that look to be in decline.

410
00:37:41,000 --> 00:37:46,640
It's just a fact of life
that as economies progress
and become more affluent,

411
00:37:46,640 --> 00:37:50,680
they transfer resources away
from manufacturing to other things.

412
00:37:50,680 --> 00:37:54,720
We turn car workers into violinists,
metaphorically speaking.

413
00:37:54,720 --> 00:37:58,600
That's not a sign of our failure.
It's a sign of success.

414
00:38:24,680 --> 00:38:29,320
'Dynamic, efficient,
high value, less visible

415
00:38:29,320 --> 00:38:35,160
'and more niche.
It's not easy to keep track
of manufacturing these days.

416
00:38:38,760 --> 00:38:44,040
'Take our bike industry.
It's smaller than it used to be,
but more specialist,

417
00:38:44,040 --> 00:38:47,720
'like Brompton,
the British fold-up bike.

418
00:38:51,360 --> 00:38:57,400
'The Brompton design team
wanted to show me that their bikes
can be versatile,

419
00:38:57,400 --> 00:39:02,080
'even though they're sold
specifically for urban commuting.'

420
00:39:02,080 --> 00:39:08,160
Brompton really is
a very niche company with just one
specialist product line,

421
00:39:08,160 --> 00:39:14,400
but if you can find enough small,
profitable niches, you can build
a large, affluent economy.

422
00:39:16,720 --> 00:39:20,720
'And a profitable niche
can build an affluent company, too.

423
00:39:20,720 --> 00:39:25,760
'Amazingly,
Brompton is now Britain's
biggest bike manufacturer.'

424
00:39:27,000 --> 00:39:33,040
Here we have the really clever part
of the factory. This is where
all the frames are made,

425
00:39:33,040 --> 00:39:39,520
this is where we have all the
forming, cropping and bending
of the raw material to make the bike.

426
00:39:39,520 --> 00:39:45,560
'The company is turning out 30,000
bikes a year, but Managing Director
Will Butler-Adams insists

427
00:39:45,560 --> 00:39:47,920
'it's not a mass-market business.

428
00:39:47,920 --> 00:39:54,360
'Even the cheapest bike costs £700
because, he says,
specialist bikes like this

429
00:39:54,360 --> 00:40:01,000
'need to be high-precision
and hand-built.' If you look at
the workmanship, perfectly lined.

430
00:40:01,000 --> 00:40:03,880
Beautiful little pools.

431
00:40:03,880 --> 00:40:09,480
And he's put his name on it.
Every brazer puts their name
on each part they braze.

432
00:40:09,480 --> 00:40:13,480
It would be nice if they could
mass produce these one day.

433
00:40:13,480 --> 00:40:19,520
If you don't have a name to it, you
can rush it, you don't care, chuck it
in a pile, no one knows it's yours.

434
00:40:19,520 --> 00:40:26,160
If you put your name to something,
you're proud of it. It's your
workmanship for the life of the bike.

435
00:40:29,600 --> 00:40:34,640
'At the turn of the 20th century,
Rover, which later became
the car firm,

436
00:40:34,640 --> 00:40:42,040
'built the first truly modern
bicycle - a niche product, costing
over £1,000 in today's money.

437
00:40:43,080 --> 00:40:48,840
'As the century wore on,
companies like Raleigh built
industrial empires on bikes,

438
00:40:48,840 --> 00:40:53,080
'churning out high volumes
of low-value products.

439
00:40:53,080 --> 00:40:59,160
'Affordable motorised transport
and cheap foreign competition
began to take their toll.

440
00:40:59,160 --> 00:41:02,960
'Britain's commodity bike business
collapsed.

441
00:41:05,480 --> 00:41:09,600
'In contrast, specialisation
has kept Brompton very much alive.

442
00:41:09,600 --> 00:41:14,280
'Exports of their folding bikes
have been growing at 15% a year.'

443
00:41:14,280 --> 00:41:17,360
This one is going to Singapore.

444
00:41:17,360 --> 00:41:20,120
Arizona. Spain, Spain, Spain, Spain.

445
00:41:20,120 --> 00:41:24,760
Singapore, Singapore, Singapore.
Disappearing all over the world.

446
00:41:24,760 --> 00:41:27,400
You export about two-thirds of them?

447
00:41:27,400 --> 00:41:30,520
To about 38 different countries.

448
00:41:30,520 --> 00:41:34,560
'China may make specialist bikes
like these some day,

449
00:41:34,560 --> 00:41:40,400
'but they won't compete with us
while we have an advantage
in design, skills and branding.

450
00:41:40,400 --> 00:41:46,440
'Fortunately, as China gets richer,
the more of our high-value stuff
the country can afford to buy.'

451
00:41:46,440 --> 00:41:49,600
There is a lot of potential in China.

452
00:41:49,600 --> 00:41:57,040
It could be bigger than all of
the world we now supply put together,
but the interesting thing is

453
00:41:57,040 --> 00:42:01,280
they would only want their bikes
if they were made in London.

454
00:42:01,280 --> 00:42:05,120
If we moved manufacture to China,
it would ruin it.

455
00:42:05,120 --> 00:42:11,160
So we'd better employ a few more
people and make a few more bikes
and sell a few more in China!

456
00:42:15,000 --> 00:42:19,480
'Brompton shows that dynamic
companies and economies

457
00:42:19,480 --> 00:42:23,520
'are built on the back of doing
things others can't do,

458
00:42:23,520 --> 00:42:27,760
'rather than competing with them
in things they can.'

459
00:42:30,320 --> 00:42:37,160
British manufacturing has followed
a particular direction towards
narrower and more lucrative markets.

460
00:42:37,160 --> 00:42:43,200
But there's another interesting
characteristic of British industry -
its openness to the world.

461
00:42:43,200 --> 00:42:47,240
About a third of British
manufacturers are foreign-owned.

462
00:42:47,240 --> 00:42:53,320
That doesn't mean we're not making
things. It means investment
and expertise from overseas

463
00:42:53,320 --> 00:42:57,320
is helping ensure
we're as good as the best.

464
00:43:11,080 --> 00:43:15,560
'Just look at Jaguar Land Rover.
A great British company?

465
00:43:15,560 --> 00:43:21,600
'Well, it still manufactures here,
but like most of our motor industry
it's now owned by foreigners.

466
00:43:21,600 --> 00:43:24,560
'And flourishing for it.

467
00:43:24,560 --> 00:43:28,800
'To appreciate how overseas
influence has brought benefits,

468
00:43:28,800 --> 00:43:35,440
'we should think back to the 1970s
when this company was British
through and through.'

469
00:43:35,440 --> 00:43:37,480
JEERING

470
00:43:44,160 --> 00:43:50,400
What did you find on your first day
in your new job as chairman
and managing director of Jaguar?

471
00:43:50,400 --> 00:43:54,640
Well, before I started at Jaguar, I'd
just had a two-week skiing holiday

472
00:43:54,640 --> 00:43:57,080
and only arrived back the day before.

473
00:43:57,080 --> 00:44:02,600
I went into work on Monday morning
and when I got there
everybody was on strike.

474
00:44:05,600 --> 00:44:11,640
'Chaos in the car industry
resulted in production standards
that were comically poor.

475
00:44:11,640 --> 00:44:15,920
'Vehicles without lights
were just the start.'

476
00:44:15,920 --> 00:44:19,480
The quality was so bad
we were repainting every body,

477
00:44:19,480 --> 00:44:23,040
knocking out the dents and...
Oh, no.

478
00:44:23,040 --> 00:44:25,440
So we were painting everything twice.

479
00:44:25,440 --> 00:44:31,440
If I said to you, what went wrong
with the British motor industry
in the 1970s...?

480
00:44:31,440 --> 00:44:35,440
The trouble was, it...
Everything was wrong.

481
00:44:35,440 --> 00:44:39,480
'We've remembered
this painful period ever since,

482
00:44:39,480 --> 00:44:45,920
'but what's less well appreciated
is the quiet revolution which was
to transform British car making

483
00:44:45,920 --> 00:44:50,040
'and our entire
industrial landscape.

484
00:44:54,920 --> 00:45:01,000
'First, it was the Japanese
with their new ways of doing things
that helped us.

485
00:45:01,000 --> 00:45:05,840
'We lacked good management
in the motor industry
and were out of date,

486
00:45:05,840 --> 00:45:10,600
'so when the Japanese began to open
new car plants in Britain,

487
00:45:10,600 --> 00:45:15,040
'we had the good sense to learn
from those who could do it better.'

488
00:45:16,600 --> 00:45:21,360
What the Japanese brought to Britain
was order, efficiency,

489
00:45:21,360 --> 00:45:25,400
perhaps even a kind of beauty
to the art of manufacturing.

490
00:45:25,400 --> 00:45:29,040
Their methods
had special names like Kanban

491
00:45:29,840 --> 00:45:34,520
and Kaizen, meaning continuous
improvement or change for the better

492
00:45:34,520 --> 00:45:39,160
and that was certainly something
the British car industry needed.

493
00:45:40,120 --> 00:45:44,120
'Their methods didn't
just revolutionise car making.

494
00:45:44,120 --> 00:45:48,560
'They were taken up by just about
every manufacturer in Britain,

495
00:45:48,560 --> 00:45:53,200
'just like the one in this
nondescript Birmingham street.

496
00:45:58,120 --> 00:46:04,480
'Like so many of our companies
these days, GKN doesn't make
finished products in this factory,

497
00:46:04,480 --> 00:46:09,320
'but it does make vital parts for
almost half the cars in the world -

498
00:46:09,320 --> 00:46:13,000
'shafts that transfer power
from the engine to the wheels.

499
00:46:13,000 --> 00:46:19,840
'Like the rest of the British
automotive industry, GKN was
struggling in the late 20th century.

500
00:46:19,840 --> 00:46:25,040
'The Japanese didn't take over,
but their influence was profound.'

501
00:46:26,400 --> 00:46:32,240
If you look at the productiveness
of this cell, in comparison to
the 1970s and 1980s,

502
00:46:32,240 --> 00:46:37,440
we'd have had a lot of men involved
in manufacturing these parts. Yeah.

503
00:46:37,440 --> 00:46:39,760
This cell typically works with one.

504
00:46:39,760 --> 00:46:45,040
'The Japanese system was
all about continuous improvement,
eliminating waste

505
00:46:45,040 --> 00:46:49,280
'and creating a more harmonious
working environment.'

506
00:46:49,280 --> 00:46:56,080
White. White machines, white
equipment. This is about the way we
organise our production facilities.

507
00:46:56,080 --> 00:47:00,520
There's a much greater emphasis
on the quality of our product.

508
00:47:00,520 --> 00:47:04,560
We measure quality in the automotive
industry in parts per million -

509
00:47:04,560 --> 00:47:09,200
how many rejects we have
per million parts delivered. Right.

510
00:47:09,200 --> 00:47:15,240
So back in the '70s and '80s,
most companies were maybe
in the 300-400 parts per million.

511
00:47:15,240 --> 00:47:19,200
We're now less than...
Well, we're in single digits.

512
00:47:20,600 --> 00:47:27,120
'GKN now uses Japanese systems
in all its factories
throughout the world.

513
00:47:27,120 --> 00:47:29,880
'Its fortunes have been transformed.

514
00:47:29,880 --> 00:47:36,880
'We invented the factory for
the rest of the world, but the rest
of the world has refined the idea.

515
00:47:36,880 --> 00:47:39,520
'No shame in that.

516
00:47:45,080 --> 00:47:49,040
'As well as allowing the Japanese to
influence how our companies worked,

517
00:47:49,040 --> 00:47:54,880
'we allowed them to create
a whole new motor industry
in this country from scratch.

518
00:47:54,880 --> 00:47:58,400
'Britain's biggest car maker
is now Nissan.

519
00:47:58,400 --> 00:48:06,160
'It's back to economic principles
again and using the resources
at hand - foreign expertise.'

520
00:48:06,160 --> 00:48:12,000
What the Japanese did was fill in
the gaps. Where we lacked talent,
they provided it.

521
00:48:12,000 --> 00:48:17,840
And, in effect, instead of
going it alone, we became part
of a global car industry.

522
00:48:17,840 --> 00:48:23,920
That's been the story of our nation.
We are more globally integrated
than other large economies.

523
00:48:23,920 --> 00:48:30,000
That's not great news for ardent
nationalists what want to see
British products with British flags,

524
00:48:30,000 --> 00:48:33,000
but it has kept us very productive.

525
00:48:33,000 --> 00:48:40,360
'We haven't just let foreigners
show us how to make things better.
We've let them invest, too.

526
00:48:40,360 --> 00:48:43,800
'They've now bought up
most of our motor industry.

527
00:48:43,800 --> 00:48:47,840
'Jaguar Land Rover's latest owners
are the Indian Tata group.

528
00:48:47,840 --> 00:48:51,680
'Some might say our property has
fallen into foreign hands,

529
00:48:51,680 --> 00:48:56,320
'but you could say their investment
money keeps falling into ours.'

530
00:48:56,320 --> 00:49:01,480
We were fortunate that BMW
purchased the company

531
00:49:01,480 --> 00:49:05,520
and they invested a lot of money
within Land Rover products.

532
00:49:05,520 --> 00:49:08,520
Then, after BMW, Ford.

533
00:49:08,520 --> 00:49:13,760
Ford invested another shed load
of money, which was rather good.

534
00:49:13,760 --> 00:49:16,160
And now we're owned by Tata.

535
00:49:18,760 --> 00:49:23,600
'Our motor industry now builds
about 1.3 million cars a year

536
00:49:23,600 --> 00:49:28,040
'and contributes about 10%
of the country's entire exports.

537
00:49:28,040 --> 00:49:32,280
'Letting foreign companies
and foreign techniques into Britain

538
00:49:32,280 --> 00:49:37,160
'hasn't brought the end of UK
manufacturing, but its salvation.

539
00:49:40,840 --> 00:49:46,880
'It all adds up to a British
industrial base that has learnt
to focus on what it does well,

540
00:49:46,880 --> 00:49:52,840
'dispensing with the rest.
It makes perfect sense,
but it raises an important question:

541
00:49:52,840 --> 00:49:59,440
'is our manufacturing sector
big enough to carry
our enormous economy?'

542
00:49:59,440 --> 00:50:03,080
It's manufacturers
we mainly rely on to export.

543
00:50:03,080 --> 00:50:06,720
So it's they who earn
the money to pay for imports.

544
00:50:06,720 --> 00:50:13,360
Given that we import far more than
we export, you've just got to worry
that the sector's simply too small

545
00:50:13,360 --> 00:50:17,920
to shoulder the enormous burden
it has to carry.

546
00:50:26,000 --> 00:50:28,800
'Back at BAE Systems,

547
00:50:28,800 --> 00:50:34,640
'our biggest manufacturer sums up
British industry's strengths
and weaknesses.

548
00:50:37,160 --> 00:50:44,200
'Yes, it's high-end, lean,
specialised, globally-integrated
and innovative,

549
00:50:44,200 --> 00:50:48,480
'but there simply aren't
enough companies of this size.

550
00:50:53,320 --> 00:51:00,240
'BAE has followed the UK trend,
narrowing its range,
exiting civil aviation,

551
00:51:00,240 --> 00:51:06,360
'focusing on security and defence
and the complex manufacturing end
of it at that.'

552
00:51:09,560 --> 00:51:13,960
It's not done with just a few bolts.
It's more like micro-surgery.

553
00:51:15,960 --> 00:51:19,520
It's all quite delicate?
These aircraft are hugely strong.

554
00:51:19,520 --> 00:51:24,760
A Mini is 1.5 tonnes. You could put
63 Minis on a Typhoon wing.

555
00:51:24,760 --> 00:51:30,080
'It's advanced, but BAE Systems
can't exist on Typhoons alone.

556
00:51:30,080 --> 00:51:35,360
'It has to keep adapting
as the rest of the world catches up.

557
00:51:38,400 --> 00:51:44,040
'So in the deserts of Australia,
they've been testing
the next big thing - Mantis,

558
00:51:44,040 --> 00:51:48,080
'the pilotless reconnaissance plane
that flies and thinks for itself.

559
00:51:48,080 --> 00:51:53,720
'BAE Systems has now signed a deal
with the French
to develop it further.'

560
00:51:53,720 --> 00:51:57,760
There's a really important change
in defence aerospace happening,

561
00:51:57,760 --> 00:52:02,400
perhaps ranked alongside the move
in naval terms from sail to steam,

562
00:52:02,400 --> 00:52:07,040
where we go from manned aircraft
to unmanned aircraft.

563
00:52:07,040 --> 00:52:13,480
The consequences of standing still
and not actually striving
to be out in front of the others

564
00:52:13,480 --> 00:52:17,920
is simply that you lose the race
and the enterprise collapses.

565
00:52:17,920 --> 00:52:24,160
It's why we're focused on
not just the next big thing, but
the thing after that and after that.

566
00:52:26,880 --> 00:52:33,600
'For now, the planes are manned,
still carrying the occasional
passenger like me.

567
00:52:34,560 --> 00:52:37,000
'Now the bad news.

568
00:52:41,000 --> 00:52:45,720
'BAE Systems generates about
£4 billion of exports a year,

569
00:52:45,720 --> 00:52:50,680
'but last year we imported
£30 billion more than we exported,

570
00:52:50,680 --> 00:52:55,320
'a huge gap that has to be plugged
with yet more borrowing.

571
00:52:55,320 --> 00:52:57,960
'Elite our manufacturing may be,

572
00:52:57,960 --> 00:53:02,000
'but it's not big enough
to meet the task at hand.

573
00:53:11,600 --> 00:53:15,440
'So why might we have
too little manufacturing?

574
00:53:15,440 --> 00:53:19,480
'This is where we come to our role
in the economy, you and I.

575
00:53:21,400 --> 00:53:26,440
'For many years, we've been
more interested in buying things
than making them.

576
00:53:26,440 --> 00:53:31,280
'In the Derwent Valley, where
the Industrial Revolution started,

577
00:53:31,280 --> 00:53:33,840
'you see the shifting priorities.

578
00:53:33,840 --> 00:53:39,880
'This old textile mill -
the plan is to convert
big chunks of it into flats

579
00:53:39,880 --> 00:53:44,520
'to buy and to furnish.
And look at this other old mill.

580
00:53:44,520 --> 00:53:51,160
'It could be fitted out
as a brand-new factory, but no.
It's a complex of shops.

581
00:53:52,720 --> 00:53:56,560
'This industrial site
once made oils and soaps.

582
00:53:56,560 --> 00:54:01,920
'Now it's made way for cars,
a roundabout and more homes
for sale or rent.

583
00:54:03,800 --> 00:54:09,840
'Our decision to spend rather than
save doesn't just affect the
landscape of old industrial towns.

584
00:54:09,840 --> 00:54:14,080
'It has enormous consequences
for our entire economy.

585
00:54:16,160 --> 00:54:20,880
'It's our savings that pay
for the tools manufacturing needs.

586
00:54:20,880 --> 00:54:27,240
'We put money in a bank or pension,
which is invested in companies that
need cash for plant or machinery.

587
00:54:29,560 --> 00:54:35,200
'The economics may be complex,
but the biggest industrial nations,
like Japan and Germany,

588
00:54:35,200 --> 00:54:38,840
'save and invest a lot
and manufacture and export a lot.

589
00:54:44,600 --> 00:54:49,760
'So is this where Britain has
gone wrong, saving too little?

590
00:54:49,760 --> 00:54:55,400
'The old principle applies -
economies use the resources at hand
as best they can.

591
00:54:55,400 --> 00:55:01,840
'Take away the capital for
investment, you'll have less plant
and machinery, less manufacturing.'

592
00:55:03,000 --> 00:55:09,240
Funny to think, isn't it,
that the amount you and I save and
borrow, or that the government does

593
00:55:09,240 --> 00:55:13,400
could affect manufacturing,
but I think it does.

594
00:55:13,400 --> 00:55:20,040
If we have our heads screwed on and
know what we're doing financially,
put enough aside for our retirement,

595
00:55:20,040 --> 00:55:26,280
well, then no problem.
The manufacturing sector we have is
probably the one the nation needs.

596
00:55:26,280 --> 00:55:32,800
If, though, we've been making
mistakes, living too much
for the present, not saving enough,

597
00:55:32,800 --> 00:55:38,200
then there's every reason to think
we've let too much manufacturing go.

598
00:55:41,400 --> 00:55:48,040
'So what to conclude?
The manufacturers I've met
are all working hard to sell more,

599
00:55:48,040 --> 00:55:56,040
'but given our export gap,
we'd need another 36,000 companies
the size of Brompton to pay our way.

600
00:55:58,240 --> 00:56:04,480
'It's a tall order
and Will Butler-Adams
feels things have to change.'

601
00:56:04,480 --> 00:56:08,720
Without a manufacturing base, an
innovative base of creating things,

602
00:56:08,720 --> 00:56:12,760
ultimately we can't sustain
our economy on services alone.

603
00:56:12,760 --> 00:56:14,800
I think we've learnt that.

604
00:56:14,800 --> 00:56:21,400
Hopefully we've learnt that enough
to change the balance of the economy
to bring manufacturing back up.

605
00:56:22,840 --> 00:56:28,280
'Britain desperately needs
a boost in performance
from industry and exports.

606
00:56:28,280 --> 00:56:31,920
'It'll be a long road,
but we have made a start.

607
00:56:31,920 --> 00:56:38,040
'Post-financial crash,
we're saving more and manufacturing
is beginning to grow.

608
00:56:38,040 --> 00:56:40,680
'There are reasons for confidence.'

609
00:56:40,680 --> 00:56:46,520
We have the ability,
we have the mentality, we have
the history, we have the expertise,

610
00:56:46,520 --> 00:56:51,040
we're innovative,
we're imaginative, we're creative.

611
00:56:51,040 --> 00:56:53,680
We should have more self belief

612
00:56:53,680 --> 00:56:59,160
and less doubt
about what we can achieve
if we put our minds to it.

613
00:56:59,160 --> 00:57:04,480
'So yes, we need to do more,
but contrary to the impression
so many have,

614
00:57:04,480 --> 00:57:08,760
'we CAN manufacture
when we put our minds to it.'

615
00:57:08,760 --> 00:57:14,800
When you look at the industry
in the UK, it doesn't look like
the dark, satanic mills

616
00:57:14,800 --> 00:57:18,840
with blackened-faced workers
coming out at the end of a shift.

617
00:57:18,840 --> 00:57:24,120
It's a modern, hi-tech environment,
which you can't discern from outside.

618
00:57:24,120 --> 00:57:29,720
We tend not to have been
out and about trumpeting it
in the way we could have done.

619
00:57:33,480 --> 00:57:39,920
Ultimately, manufacturing is
all about the physical,
the cloth or the metal or machines.

620
00:57:39,920 --> 00:57:44,920
It's incredibly important to the UK
with no sign of that ever changing,

621
00:57:44,920 --> 00:57:48,960
but if I make one observation
about the factories I've visited,

622
00:57:48,960 --> 00:57:55,160
it's that all the improvements
have come out of the thinking,
rather than the manual work.

623
00:57:55,160 --> 00:58:01,000
So the ironic thing is
that the future of manufacturing,
for all its physicality,

624
00:58:01,000 --> 00:58:04,960
depends much more
on our brains than our hands.

625
00:58:06,160 --> 00:58:10,800
'And that's what I'll be examining
next time on Made In Britain.

626
00:58:10,800 --> 00:58:15,000
'What does innovation and creativity
contribute to the economy?

627
00:58:15,000 --> 00:58:20,160
'How can brand power and brain power
help solve the nation's problems?'

628
00:58:22,360 --> 00:58:26,400
To discover more about how Britain
pays its way in the world

629
00:58:26,400 --> 00:58:32,440
and to contribute your experiences
to the Open University's
online toolkit, visit:

630
00:58:35,000 --> 00:58:38,640
And follow the link
to the Open University.

631
00:58:54,000 --> 00:58:58,040
Subtitles by Subtext
for Red Bee Media Ltd - 2011

632
00:58:59,000 --> 00:59:01,640
Email subtitling@bbc.co.uk