James Dyson: Britain’s next industrial revolution

September 6, 2013 7:20 pm

Britain stands on the cusp of a new industrial revolution

By James Dyson

British engineers could be building power stations across the globe, writes James Dyson

After a buoyant summer, the economy seems to be returning to health. Manufacturing is coming to the fore as a driver of the economic recovery. We need to nourish, not ignore, the power behind exports and the creator of long-term and sustained wealth: exportable technology. The data ought to be good for confidence (as well as headlines), but short-term numbers must not alter long-term thinking. That is what got us into this mess. National economic output is still a long way below the levels of 2008 and our export markets are more competitive than ever. Let’s stick to the plan. We must remain steadfast in our ambition to put the development of exportable technology back at the core of the economy, and once again kindle the ambition that made the Victorians world-beaters. Our total focus must be on developing the best products and technologies of our own – to sell to the world.The good news is that the message seems to be getting through. My pre-election report to David Cameron,Ingenious Britain , suggested an increase to the generosity of corporation tax credits to encourage businesses to invest in research and development and to support investors who back such companies. R&D is expensive, risky and time-consuming. But it is vital. It gives companies an edge on their competitors and ensures they develop technology that the world wants to buy.

The coalition reacted and increased the generosity of the scheme. It was a bold policy, made for the right reasons, and for the long term. Patent applications rose 29 per cent in 2011 and investors have reacted positively. They will surely rise further thanks to the Patent Box, a policy introduced this year, which has opened businesses’ eyes to the benefits of long-term R&D. This policy has already encouraged GlaxoSmithKline, the pharmaceutical company, to transfer 150 overseas research projects to the UK. These are long-term policies supporting long-term projects. That’s the point.

Indeed, Britain’s most successful research intensive companies have been thriving during the recession.Arm computer chips, developed in Cambridge, have 35 per cent of the share of their market – they are world leaders. Renishaw, the engineering technology company that makes high-tech sensors, pours money back into research and development with rigour, and recently won a Queen’s Award for its multi-sensor scanning systems. Jaguar Land Rover is investing billions in new products – and has impressive sales to show for it. We may never see the end of boom and bust, but by having enviable technology a company, and more broadly an economy, can make itself less vulnerable to downturns.

Genuine technology takes decades to perfect, Arm’s chips and JLR’s engines result from years of robust investment in R&D. My company, Dyson, took 15 years and invested hundreds of millions of pounds to develop our latest digital electric motors. We’re still perfecting them. But the market moves quickly – there is no room for complacency.

People want the best technology, recession or not – and, unless you keep investing, competitors soon catch up. To put it in perspective: 50 per cent of Dyson’s business last year came from technology we launched that year. To make sure we remain ahead of the competition, we ploughed 36 per cent of the previous year’s profits, after tax, into research and development in 2012, and we are looking for 650 new engineers this year. About half will be in the UK – conceiving and developing the next generation of our technology. The remainder will be in southeast Asia, translating those blueprints into tangible, mass-producible technology that we can export to the world.

Our machines may be assembled in southeast Asia, but the majority of the value of our technology is in the UK. Singapore is expensive but we assemble our power-dense digital motors there because of the support that is available – our suppliers are not here and the expertise is there to support the fully robotic production lines.

For true long-term growth we must focus on having these skills to call on in the UK – attracting the most high-tech of companies and encouraging them to stay. Let us be bold. Rather than accept the status quo, give our engineers something to aim towards. Who is to say we cannot have English trains traversing the German countryside, and British engineers building power stations across the globe? We must develop technology of our own and be ambitious.

It is unavoidable that big decisions – which power stations to build or whether to build fast trains – are political ones. But, on many of these issues, politicians should defer to experts. To support longer-term growth, engineers and scientists need to be given space to develop the technology with as few political barriers as possible.

I am not sold on the value of wind power in an engineering sense – but the potential gains from unlocking new sources of energy are enormous. So let us investigate. Exciting technologies such as nuclear fusion could, in theory, offer cheap, clean and plentiful electricity, solving our energy crisis. These ideas are a long way off. The earliest projected date for a commercial facility is about 2050 but, unless we start investing now, we will never get there.

To think beyond our traditional sphere of expertise, to think big, we need more engineers. They will be the biggest growth stimulant of all. A highly skilled workforce developing technology creates exports and wealth. We only create about 12,000 engineering graduates a year. Meanwhile, our competitors are churning them out – it is predicted that in two years we will have a deficit of 200,000 engineers.

Britain is teetering on the edge of an engineering revolution. It is time to jump. If we unlock the potential of our brightest engineering talent, and invest in forward-thinking research and development, we might just have the blueprint to create patentable technology for the world and for the long term.

The writer is founder and chairman of Dyson, the technology company

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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