You came to the EEF five years ago with a strong commercial background. What have been the challenges of running a membership organisation?
It’s an enormous privilege to run EEF. But one of the main challenges has been trying to represent companies of all shapes and sizes and having to balance their varying interests and priorities and come out with a unified policy that does the best for the whole manufacturing sector. Sometimes it’s quite difficult to satisfy every stakeholder. But I take decisions that I believe will be right for the wider membership, as a whole.
Larger manufacturers are given a strong voice through the EEF. But do you think you do a good enough job battling for smaller firms?
Of the 130,000 manufacturing companies in the UK, 80% are small firms. They make up a huge percentage of employment and they are a very powerful group in their own right. Yes, it’s fair to say the larger corporates with their own communications and PR departments can get more publicity. But government looks to us because we have no particular policy axe to grind and because we speak for companies across the sector as a whole. So I would like to think that we get the balance right – and if on occasion we don’t get the balance right, I have 11 regions and regional boards to point me in the right direction.
What is it about the role that you really enjoy? And presumably there are parts you dislike?
One of the really satisfying aspects is getting feedback from member companies who say that a certain aspect of our work or a campaign has gone well and that they’ve appreciated it. Also enjoyable is standing in front of the media or a large audience and offering views, which I know as leader of the EEF will be respected and listened to. A third part is getting out of Westminster visiting manufacturing companies and asking questions about their innovation, their exports, their processes. As for the downsides, there is no part of this role I don’t enjoy. You’d have expected me to say that!
I suppose your role is a lot easier if the manufacturing and engineering sector is doing well? How are things at the moment?
Things are positive. One of the upsides with regards to the dreadful recession in the third quarter of 2008 was a recognition across all sectors – government, opposition, businesses, media – that Britain needs to do more engineering. We are seeing a refocusing on British manufacturing and engineering. That is to be welcomed. We’re seeing the implementation of industrial strategy, and that has resulted in the commencement of modest growth from around the third quarter of 2011, on through 2013, and more significantly in 2014. I am optimistic about this year and the longer-term future.
You meet a lot of politicians. Do you think they respect engineers, and do they understand what engineers do?
Has government got the message about manufacturing and engineering? Yes, I think it has. Much of the coalition’s policy has been in support of the march of the makers. Do politicians at senior level get the absolute detail and the drivers of what makes engineers tick? Yes, again I think they do, to a greater or lesser degree. Could there be greater understanding? That’s always the case. But when I look at our political friends on the front benches – coalition and Labour – I would say that they get it. And that’s to be applauded. Now equally we must continue to hold the toast to the fire to make sure the policies that they come up with support our agenda going forward.
What about the skills agenda? Is there a realisation in government and companies that we need more engineers coming through?
This is a huge issue. Anecdotally, I remember back to the second quarter 2010, at a point when British manufacturing was 15% below the level of output it had been in 2008, and our quarterly trends survey flagged access to skills as a serious issue among members. I looked askance at the survey and I sent it back challengingly to our economists.
The next quarterly survey came in and the issue had become clearer. It was even more challenging in the minds of our member companies.
Since then, we can see that this problem has got worse and worse as manufacturing has recovered. A lot of it is image. And I must say that we are starting to change the image of engineering and manufacturing. But it surely starts at school and certainly before the choices that youngsters have to make at the age of 13. It’s a long-term challenge.
Doesn’t this call for radical policies? One proposal might be to abolish tuition fees in subjects where there are skills shortages. Would you support that?
That would be a very strong market intervention, and I fear it could have unintended consequences, although I’m not quite sure where those consequences would be. Where we are at the minute is a fee structure that requires students to pay £9,000 a year. While I initially questioned that, what we have seen is a significant drop-off in the number of young men and women going into softer subjects at university. Secondly we have seen an upturn in the numbers going into harder Stem-related subjects like physics and maths as they can see further career progression once that investment is made. We’ve also seen a much stronger upturn in the numbers going into apprenticeships. So, no, I don’t think I would support such a market intervention. I support the system of fees that we now have.
PE comes out just after the election. What advice would you give to the new government?
Stability is paramount. If it is not broken, then please do not attempt to fix it. We have some strands of industrial strategy that are working and they should be allowed to continue. We have a commitment to apprentice places which is very welcome. We have got strands around the wider issue of innovation. We have got substantial investment in applied research through the Catapults. We have resources going into smart regulation. We’ve got initiatives to encourage investment through the Regional Growth Fund. We’ve got the prospect of a British industrial bank. So there are levers of growth that should be allowed to continue without undue interference.
But there must have been areas where the coalition didn’t perform well, and that you would like to see rectified?
Successive governments can look at economic policy through very different lenses. That means getting a long-term plan in place on infrastructure is difficult. The single biggest issue, for me, is airport capacity and the problem of how it has been kicked into the long grass. We’ve also seen underspend in the road network. It’s time we took party politics out of infrastructure. The EEF supports John Armitt’s proposal for a national infrastructure commission which would look at what this country needs over the next 20 years, commit to it, and seek to hold politicians to account.
So you must be keen to see all-party support for HS2? It’s a big project which a lot of your members might feed in to?
EEF is supportive of HS2. But the economic case for it has not been fully made. When I go round member companies, even in the areas affected, the support for it is not wholehearted. I think it is one of those projects that can define what a nation stands for and how it projects itself. I am supportive but my message is that, if many of our members aren’t convinced about the importance of HS2, then government needs to sell the benefits better than it has to date.
Where else can government better support your members?
Energy policy, from industry’s point of view, is a question of balance. We all support the reduction of emissions. But that has to be achieved through legislation that does not unduly limit the competitiveness of British industry. Or if it does limit competitiveness then it does it in line with other nations. Where I would criticise any government is when the UK defines and implements legislation that forces British industry to decarbonise at a rate quicker and more aggressively than any of our partner nations. That is likely to be damaging to our competitiveness and economic wellbeing.
Does legislation already exist where you think that is the case?
Yes. There is a unilateral tax on British industry in terms of seeking, unsuccessfully I might add, to drive down carbon emissions. It’s what we call the carbon price floor. It’s a unilateral tax over and above that emanating from the European Commission. It’s a £2 billion tax on British business. It’s limiting investment among some of our industries.
Last July you became chairman of Ceemet, the European organisation for the engineering industries. What have been your achievements in that role?
I was determined to bring a more focused debate to our colleagues in Brussels. Sometimes the language in Brussels can be quite bland and I was determined to cut through that. I have been prepared to speak firmly about the need for competitiveness and investment, about the disgraceful level of unemployment in some countries, and about some of the restrictions of getting people into the workforce.
Has that forthright approach had any tangible effect?
Yes, I was delighted with the response that I got. I had discussions with Frans Timmermans [first vice-president of the European Commission and the European Commissioner for better regulation]. He advised me that he inherited 400 draft sets of legislative proposals when he came into the role last October. He believes he has succeeded in preventing 73 of those proposals from coming through.
When it comes to Brussels and the parliament we are up against a massive bureaucracy that sees its raison d’être as being bringing in legislation. Brussels must realise there is a strong hunger and desire for a growth agenda and the need for smart, properly assessed regulation.
One target from Brussels I do support is that manufacturing will rise from 15.1% to 20% as a percentage of GDP among EU nations by 2020. But we are seeing falling investment, rising unemployment, declining productivity – that indicates a need to realign the commission and the parliament along the above lines.
Your voice could be significantly weakened if the UK decides to leave the EU. Where do you stand on that issue?
I have a very strong mandate from our member companies to work to keep us in Europe. That mandate is in the region of 85% of our members. Yes, the EU needs to be reformed. But that is secondary to the requirement to stay in Europe.
What would happen if we left the EU?
Life would go on. But development and growth would be severely impacted if we left. Some 49% of our exports go to the EU and we enjoy an open market. I dread to think of what our economy would be without people from other countries coming in to support it.
Career in brief
• Following graduation from Glasgow University with a degree in economics, Terry Scuoler attended the Royal Military Academy at Sandhurst and was commissioned into the Argyll and Sutherland Highlanders where he served for five years as an infantry officer. On leaving the army in 1978 he started his career in publishing and the construction industry.
• In 1984 he joined Royal Ordnance (now part of BAE Systems) as European marketing manager and later worked in positions of increasing seniority in commercial, procurement and general management roles.
• In 1999 he led a management buy-in and became managing director of Ferranti Technologies, returning the company from years of decline and loss-making to substantial growth and high profitability.
• Scuoler became the chief executive of EEF in March 2010. He also sits
on the board of Semta, the Sector Skills Council for Manufacturing.