Turning the tanker

The report of the Electronics Innovation and Growth Team (EIGT), published in December 2004, painted a fairly unpleasant picture of the state of the UK's electronics industry. The UK electronics industry was, it concluded, 'fragmented and invisible'; this despite the fact that electronics impacted almost every sector of the economy. There was no clear leadership and no critical mass. Something clearly needed to be done. The EIGT was chaired by David Kynaston, who retired as executive senior vice president with Solectron in January 2002. Prior to joining Solectron, Kynaston was director of the Business Communications Systems unit at Philips Electronics. "We spent 18months preparing the report," he noted. "If you look back, we'd just come out of the dot com crash and were in an environment of extreme concern. Electronics had, in general, gone to the Far East and share prices were something to be dismayed at. In many respects, the same situation pertains today." Kynaston noted that his team found the industry 'totally under represented'. "While trade associations were trying to do a good job, there was not much beyond that." The speed with which the electronics industry has changed is a large part of the problem, he observed. "Ten years before the EIGT report, the UK had large champion companies which always gave something back to the industry. All have gone." One of the ramifications was the demise of networking. "We had to put back in place the essential networking that allows industries to strategise and grow," he commented. The EIGT report had some radical proposals. "We proposed the Electronics Leadership Council (ELC), the UK Electronics Alliance (UKEA), the Electronics Regulatory Group (ERG) and the Electronics Knowledge Transfer Network (EKTN)," he said. "We can put a tick against those boxes." "The ELC is now in its second term and has been strengthened. The UKEA struggled at first, but now has a first class agenda. Trade associations were suspicious, but we now want to see more from them and the ERG is well supported and has taken its brief into Europe. The EKTN, meanwhile, has 4500 members representing 3000 companies." Establishment of the ELC was one of the Government's first acts following publication of the EIGT's report, with Harry Tee appointed as its chairman. He noted that the ELC had met with the UKEA recently to review progress. "We looked at the strategy document produced three years ago and we are now beginning to tick off some of the things we've achieved." Tee says there are a number of key areas that still need attention. "They are priorities and we need to agree delivery mechanisms in order to make things more effective." Top of the agenda is skills, followed by finance and access to public procurement budgets. "Skills is, without doubt, top of the agenda," Tee emphasised. "But we feel that we have achieved a lot in this area already. We are working on the concept of a skills academy and are making sure all the necessary people are there to make it effective." Kynaston says he wishes the skills agenda had moved faster. "However, skills is a hard topic to address because of the long term time scales." Tee noted that finance is also important. "Getting finance to companies that need it is another priority, with a number of venture capital backed companies finding it hard to get finance." It's in this area that Kynaston and Tee believe the ELC has 'come of age'. Kynaston said: "I led a small deputation to see Lord Mandelson to discuss capital investment into electronics companies. This worked well and we have seen the announcement of Government money priming what is hoped will be a £1billion fund." Tee commented: "The ELC has lobbied hard about the importance of getting money to the point of need. It's good to know the ELC is sometimes listened to." But questions remain about how that money will be allocated. Tee is insistent that people of the quality of Hermann Hauser are involved. "While it's nice to have long term plans, we do have to think about what's needed today," Tee continued. Tee's third major agenda point is public procurement and this remains a problem for the electronics industry. "We've made headway, but still have to work harder on this aspect," he admitted. "If we're going to do something about public procurement, we need something that is lasting, consistent and which encourages procurement people within government to take a risk and allow companies to innovate solutions. If the Government is spending £125bn a year, it's worth tackling the problem." Kynaston is more general in his aim. "Small companies need access to markets," he contended, "as well as more movement on public procurement. This is vital at all levels of the electronics industry. While public procurement is getting more open, there is still much more work to be done. "Small companies can't just parachute into a market, make a pitch, go home and have long term business. They need help." Kynaston, meanwhile, pointed to a 'major contribution' into manufacturing strategy, with the UKEA making 'good headway' and doing its own lobbying. "While the EKTN doesn't lobby – it's funded by the Technology Strategy Board – it has a real agenda for its members, ranging from science to markets in order to encourage exploitation." The EKTN has been regionalised so groups can take its message into the Scottish and Welsh devolved governments, as well as regional administrations. "This has been important," Kynaston observed, "but there's still work in progress and a lot more to be done on the regional agenda." In the EIGT report, Kynaston criticised leadership within the industry, particularly corporate management. "Knowledge makes competent leaders," he claimed, "and I know from networking that we have more confident leaders, but there's not enough openness. When I worked in the US, everyone was interested in everything. The UK is getting better, but needs to go further so SMEs can see what's in someone's backyard and to have confidence in where they are technically." Kynaston says he is also pleased with progress on the industry's profile. "Electronics has a better profile and more people are talking about it. It's still a complex industry, but it's better understood by more people." Tee believes the ELC has changed; and for the better. "We've raised the bar and have more senior people. Our role is understood, we understand what the industry's needs are and we are representing them to senior levels of government. We're making a difference, but it's a long job," he concluded. Kynaston's EIGT report featured 'peak' and 'bleak' scenarios, with the latter representing where the UK might be in 2015 if the report's recommendations were not implemented. Today, Kynaston sees some evidence of 'peak', rather than 'bleak'. "Things are brighter on science exploitation and leadership skills are improving. But we need to do everything in our power to get access to markets improved for SMEs. If we all get together and take the agenda seriously, who knows what we might achieve?"