Who is Running British Manufacturing?

Pages13-16
Publication Date01 June 1992
DOIhttps://doi.org/10.1108/EUM0000000001448
AuthorWilliam J. Wood
SubjectEconomics,Information & knowledge management,Management science & operations
WHO IS RUNNING BRITISH MANUFACTURING? 13
Who is Running
British
Manufacturing?
William J. Wood
Industrial Management & Data Systems, Vol. 92 No. 6, 1992, pp. 13-16,
© MCB University Press Limited, 0263-5577
M
anufacturing companies headed by
better qualified chief executive officers
tend to be more profitable.
For over
a
decade,
Britain's manufacturing sector
has
been
largely ignored as the focus has been directed towards
the relative importance to the economy of
the
expanding
service sector. Now, as Britain struggles to escape the
grips of economic recession, politicians, economists and
the financial community are increasingly looking to
manufacturing industry to turn the economic tide.
A number of writers have suggested that the strategic
capabilities, and hence the success or failure, of an
organization are directly attributable to human factors
the characteristics of
the
individuals at senior management
level[1,2,3].
Others have stressed the importance of just
one key executive's role the chief executive officer
(CEO) as being crucial to the organization's success[4,5].
So
who is
currently running this
now
"vital"
sector
of the
UK
economy?
Of the total sales turnover produced
by
the UK's 150,000
or so manufacturing companies, some 40 per cent of this
is accounted for by just
55
companies.
This article reviews
the "qualifications" of the main board directors in these
55 companies. In addition, the profit performance of the
companies has been examined
to
determine whether there
is any possible association between the educational/
professional profiles of their existing "top team" members
and company profitability.
The UK Economy in 1991
Despite the advantage of
North
Sea
oil
revenues the UK's
visible balance of
trade
has been
in
deficit since
1983.
By
1989,
manufacturing accounted for less than a quarter
of
GDP,
and employed little more than a fifth of the
workforce. However, since 1986, when the UK
experienced a substantial reduction in the value of its oil
exports, manufactured goods have accounted for over 80
per cent (by value) of British exports[6].
The rate of consumer
price
inflation
and
bank interest rates
were among the highest in the European Community; by
the spring of
1991
the rate of UK company failures had
reached an all-time high, and unemployment was
increasing at an unprecedented rate. Recent OECD
projections of
growth,
in real GNP/GDP terms, gave the
United Kingdom the lowest forecast growth of
all
member
countries at 0.7 per cent for 1991[7], and even Her
Majesty's Treasury forecast a 5 per cent drop in
manufacturing output during the year[8].
Coutts and Godley[9] point out that, in the decade since
1980,
although the UK has had an unusually long period
of sustained growth, the actual rate of growth
(1.9
per cent
per annum) during this period has been distinctly lower
than those during the 1970s (2.4 per cent per annum) and
1960s (3.1 per cent per annum). It was also lower than
in the 1950s when ten-year growth-rates never fell below
2.4 per cent per annum. However, labour productivity in
manufacturing industry has risen significantly faster during
the 1980s (4.3 per cent per
annum).
Whereas the growth
rate for manufacturing output at 0.8 per cent, was about
the same as the 1970s (0.9 per cent), but considerably
lower than the 1960s (4.3 per cent) and the 1950s (2.8
per cent).
Given this gloomy economic backdrop, can the
manufacturing sector realistically
be
expected
to
lead
the
UK's
economic recovery?
British Managers
In April
1987
two reports were published
The
Making
of
Managers[10]
and the The Making of British
Managers[11]
both of which stressed the need to
provide Britain's managers with greater opportunities for
development, education and
training.
Nowhere is this more
true than in Britain's manufacturing industry.
A company's business strategy is rarely decided by one
individual in total isolation. It is much more likely to be
determined by a top management team, and key to the
strategy formulation process is the interaction between
the individual members of that team. Each member's
attitudes
will
have been shaped
by
past experiences, skills,
knowledge, education, the wider environment, the society
in which we live and company norms of behaviour. The

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