As the man taking over from Terry Scuoler as EEF chief executive, Stephen Phipson has some big shoes to fill. However, as I discovered when we met at the organisation’s Central London headquaters, the manufacturing veteran of 35 years, who took over last December, knows what it takes to run both a government department and a successful manufacturing firm.
Q. What’s your professional background?
A. I started on a traditional apprenticeship with Plessey, in defence manufacturing, and came through that route into engineering. My first eight years were spent there, before moving to the US. Returning to the UK, I worked for a Philips subsidiary – again, high-tech engineering, installing fibre-optic networks across the country.
From there, I took a major role with Smiths Group, where I worked for 15 years, running two of their divisions. We became the global leader in airport scanning technology thanks to a focus on engineering excellence and advanced manufacturing. Through that, we supplied into over 100 governments around the world, which first saw me get involved with various departments in Westminster.
After a couple of years at a smaller contract manufacturer in the North East, my next role saw me go down the private equity route, before an opportunity came up at the Home Office for a new role, called security industry engagement, which was about engaging industry to build capacity overseas. I worked closely with Theresa May when she was Home Secretary. It was great to get a chance to work in government – before I started I thought I knew a lot about the way government and politics works, and it turned out I didn’t know very much at all! It was also an ideal opportunity, going in as an industrialist, to press home the importance of industry to the UK.
The success of that role led to me being asked to head up the Defence and Security Organisation within the Department of Trade & Industry, which focused on exporting our skills in that area overseas. The role saw me develop very close relationships with the defence manufacturers here, as well as governments overseas. It’s been an interesting career, and the role at EEF will tie it all together, and I can use my government and industrial experience to help UK manufacturing.
Q. What are you looking to bring to the role of EEF chief?
A. For me, it’s an ideal role. We’re at a critical stage with Brexit, and it’s vital that the voice of manufacturing is heard loud and clear.
I’m hoping to bring an understanding of the way government works and some of the pressures and challenges they’re having to cope with. I will also look to put things in the appropriate terms when dealing with them to ensure the industry gets the best possible results.
On top of that, I also understand the needs of our members, coming from a manufacturing background. I understand how factories and supply chains work, and being able to reflect that experience, along with the concerns of our members, in discussions is vital.
Q. What do the words ‘UK manufacturing’ mean to you?
A. We’re a nation of inventors. The UK is where a lot of the most innovative and creative ideas come from. That is why people come here to invest in manufacturing. The more we can promote, nurture and support the UK’s brightest minds, the better.
So much innovation happens in this country. To be able to champion that and take it forward is an honour; but the important bit is ensuring we have the skills to support it. We have to get the message across to youngsters that this is an exciting industry to be part of. As we move towards things like digitalisation and the Fourth Industrial Revolution, manufacturing will be able to start attracting more people who are software-orientated to share their ideas – that’s where all the value is derived.
Q. Do you think manufacturing has a negative image in the UK?
A. Over the past 15 years or so, the area to be in has been software development. Look at the rise of the internet giants like Facebook and Google: that’s been the ‘sexy’ sector to get involved in. Manufacturing has been seen as an old-fashioned industry for too long. The message we need to spread is that the inside of a modern factory will look remarkably similar to one of those software firms.
On top of that, manufacturing has the added benefit of physically creating both products and, as a result, value. It’s a chance to work for household names, on the next generation of products. There’s so much opportunity ahead of us. We just have to get the public to understand that.
Q. The elephant in the room at the moment is, of course, Brexit. How well do you think the industry has coped with all the ongoing uncertainty to date?
A. For larger companies, not having clarity on the outcome of the negotiations has prevented them from making long-term investment decisions. There’s an understandable concern around that, so it’s imperative that we create an environment of certainty so that manufacturers can make the right investments going forwards.
A more solid Brexit situation will help firms make the decisions they need regarding their investment opportunities. If you’re a multinational company, do you invest in the UK now, or wait to see what the situation will be like in two years’ time? We are going to be encouraging the government to reach a solid position soon, so that short-term investments can be made.
A lot of the decisions announced before Christmas have been encouraging, but that needs to continue, and it’s up to all industry to keep putting the pressure on. I’m confident that manufacturers are resilient enough to solve any challenges that come their way in the wake of Brexit, but in terms of where we are at the moment, getting the business environment right is a vital place to start. Government are beginning to realise that, as well. They know we need a stable environment to take us up to when we actually leave the EU in 2019, otherwise industry will hold off investing and will lose a lot of momentum.
Q. Has a positive impact of Brexit been that it has encouraged manufacturers to look more internationally?
A. The basic answer is yes, although the data doesn’t quite support that yet. We still have a relatively small number of businesses that are active exporters; the task is to get companies exporting more into new markets, and encourage government to provide support in doing so where needed. There’s still a big job to get companies to raise their sights and look for new opportunities, not just in Europe but all over the world. British manufacturing is highly regarded over the world, and there are many countries that value our expertise very highly. I’m not asking manufacturers to take ridiculous risks, but to take a small gamble and look overseas to sell their products and services.
Q. You mentioned the high global regard for UK industry there. Do manufacturers need to be more vocal about their ‘made in Britain’ credentials?
A. Absolutely! We have a very strong reputation for quality, reliability and, above all, innovation. There are some iconic brands in this country, which are globally recognised, so we’re very well placed to be doing even more, especially when it comes to exports. As I mentioned earlier, there’s only a small number of manufacturers who are exporting, so encouraging them to do more is vital. Our biggest market remains the EU, though, so it’s important to make sure that base level of business doesn’t get disturbed in the Brexit process.
Q. Would you say that Brexit is the biggest challenge facing the industry at the moment?
A. It’s certainly a challenge, but not the only one. We’re in a changing industry, with the Fourth Industrial Revolution on the horizon. That brings into play not only how factories are going to have to reconfigure to become part of that, but also how we’re going to get the skills needed in the first place.
Thanks to the growth in technology, other threats are becoming increasingly relevant, including cyber security. If your manufacturing process is becoming more digitalised, then your need for robust security is more important than ever. There are a lot of challenges to watch out for alongside Brexit, and EEF’s role is to provide help where it’s needed for manufacturers looking to navigate them.
Q. With the recent government-led Industrial Strategy, do you think Westminster is paying more than just lip-service to the manufacturing sector?
A. The Industrial Strategy is a good start. As ever, it will take a while to get going, but it’s a good way to position industry in the right direction. The challenge now is how we implement it. It’s also important to make sure it becomes a regional strategy – it’s great having an overarching, national plan, but it has to resonate in all four corners of the country, where the innovation happens. It will be interesting to see it evolve away from a central policy and into a series of more local ones.
Another government success has been the Catapult sites, which have been providing great levels of support for advanced manufacturing sectors. For industries like space or automotive in particular, the Catapult has been able to encourage innovation to grow across the country, and I’m pleased to see that the Industrial Strategy is going some way to bring
all those strands together.
Q. The UK is often accused of lagging behind other nations when it comes to preparing for the Fourth Industrial Revolution. Do you think it’s in our national psyche to be wary of change?
A. It’s very difficult to make a generalisation like that. UK manufacturing is made up of many sub-sectors, lots of which are world-class – such as automotive. As a result, we have some of the biggest automotive manufacturers in the world investing into the UK, because we are very good at using digital techniques in that sector.
We also have a lot of other, more traditional, companies, of course, but they are starting to adopt more automation technologies. I do think that as a nation we can embrace 4IR, but the challenge will come in getting some of the smaller companies to be part of the supply chain. Larger businesses are already on it, but we need to give more support to SMEs on their journey.
Q. How important are skills for the industry going forward, and what more needs to be done to encourage the next generation into manufacturing?
A. They’re the most critical factor – without the right skills, we’re not going to be doing any manufacturing in the future. I’m extremely focused on making sure EEF plays a major role in meeting the skills needs going forward, and that we expand that part of the organisation.
In terms of getting young people involved, a lot of them will have the ‘traditional’ image of manufacturing as a dirty, dangerous industry to work in. In reality, many factories today are more like computer labs, using the latest technology, and we need to sing that message more than we currently are, both via the government and industry itself.
Many manufacturers have started hosting tours for schools, which is a great thing to do. We need to convince children who are thinking about their career choices that manufacturing and engineering are great industries to be part of. It’s not just about encouraging school-leavers or university graduates, though – we need to do more for younger children as well, especially to get them familiarised with the exciting engineering projects we have in the UK.
Q. What value do apprenticeships have for manufacturers today ?
A. It’s probably fair to say that the Apprenticeship Levy hasn’t been the most successful policy ever introduced. It’s proved to be too complicated. Lots of companies just see it as a tax, and that’s not what it was designed to be. There are defintely questions to be raised about how well it was communicated to the industry.
Companies still recognise the importance of investing in the future. Having a good training infrastructure is vitally important, or we’ll end up sleepwalking into a huge problem. A lot of manufacturers are rightly worried about their aging workforce and how they will plug the resulting gap.
Q. Do you think the current positivity that is permeating through UK manufacturing will continue through the
next year and beyond?
A. We can never be sure when and if any disruption will arise, but, as our 2018 Executive Survey (http://bit.ly/2CI3oaN) demonstrates, the market is looking very positive for the foreseeable future. The main things we can’t allow, however, is for any barriers to continued international trade to be put up.
Looking further ahead, everything we do now will pay dividends, and there are long-term decisions to consider for the future – do we have the right number of people with the right skills coming through? Is there an export arrangement with other countries post-Brexit? Are we still encouraging companies to invest in the UK? These points will continue to be as important in ten years’ time as they are today. Industry and government need to work not just on the Brexit questions, vital though they are, but look at the wider picture.
Throughout my entire career, it’s fair to say that every year has been an exciting and interesting one for the manufacturing industry, in one way or another. This year is no different – we are where we are with Brexit, and we have to make the best of it and see it as an opportunity. It’s EEF’s role to work closely with government to make the transition as seamless as possible for manufacturers.
“The ‘Great’ campaign in particular has done very well internationally – in my previous role I travelled the world speaking to other countries, and they all see ‘Great’ as a very strong brand for the UK. We need to see more businesses, in all sectors, take it up and leverage what is a world-class brand that the government
has built up.”
“There’s a lot to be said for combined degrees and apprenticeships. I personally did a graduate engineering apprenticeship, combining university learning with a hands-on experience in industry. We have to bring universities, colleges and schools up to speed with the importance of the skills agenda, and get them on board with the process.”
“We’re part of a very integrated, global supply chain, with the bulk of the innovation happening here in the UK – everything from autonomous vehicles to incredibly high-tech deep-sea oil technology.”
“The big issue for a lot of the manufacturing sector is going to be what happens with regards to exporting post-Brexit. We need to make sure that there is as little disturbance as possible to how we do it currently, and it’s important that the sector itself has a voice in that debate. Exporting is a very important part of the industry’s prolonged success.”
“Government is taking manufacturing extremely seriously. There’s a regular, weekly drumbeat coming from Westminster.”
A positive outlook
“We’ve had a good time of things in recent months. There were a few reports towards the end of 2017 that indicated some slowdown in output, but I’m very optimistic about where industry is heading in the next year.”
IMAGE CREDIT: CHARLES MILLIGAN