ICI: No flagships!

Putting a telescope to his blind eye, Admiral Nelson declared “I see no ships” as a way of ignoring an order to disengage amid heavy losses during the Battle of Copenhagen in 1801. Two centuries later – and in stark contrast to the victorious sailor – the UK has disengaged from its battle to be an industrial power and is turning a blind eye to the consequences.

Take ICI for example. Currently the target of a takeover bid by Azko Nobel, the company has seen other former parts of its business change hands in recent months with Huntsman’s sale of its European chemicals and polymers business to SABIC and now the entire remaining Huntsman business to Hexion(see Business News). These deals are just the latest in a long series of carve-ups of the one-time flagship of the UK chemical industry.

The sad demise of ICI has long since ceased to raise even a murmur of discontent in the media. Indeed, such lack of sentiment and laissez-faire is widely accepted as a fundamental virtue of a flexible British economy, where investment houses and hedge funds are seen the engine of the economy.

Trouble is the UK’s lack of top-level commitment to industry no longer tallies with the imperatives of the global economy, where developed and developing countries are carving out huge competitive advantage from leadership in key areas of science and technology.

The challenge for the new Brown-led Government is to build flagships of the future that will attract the talent and investment needed to enable UK industry to challenge its counterparts in the growing list of industrial superpowers.

READER REPLIES:

From: Tom Taylor (ex-ICI employee):

Your commentary in the recent Process Engineering on-line newsletter was very appropriate.

As an ex-employee of ICI it is sad to see its demise. and the root causes are :

1. It stopped innovative research and development and thereby its vision for the future

2. It lost its in-house manufacturing knowhow and thereby control of its costs

3. It sold Astra Zeneca which was a key future direction for the complete business

I agree that the much-vaunted “flexibility” of the UK economy has been much over-hyped and one day we will have to pay for the 700 000 government jobs that have been created but not have the wealth generating power to achieve this. The pension fund “taxation” which currently pays for them cannot go on for ever and the result will be a massive UK recession.

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Ed Fish Pandora Consulting

“There are only three ways to create wealth; mining, manufacturing and farming”. I believe this is a paraphrase of a 19th century colonel in the British Army. What have all these things in common? They are hard physical transformations.
So what has this to do with the demise of ICI? Britain is selling its ability to create wealth, and before some people panic I am not going to bash the “service sector”. Without manufacturing we cannot create wealth. We engineers in the service industry move money around the economy and that has a value; it aids the creation of wealth, but doesn’t make it happen.
If we continue to let our manufacturing base be sold and ultimately moved overseas then the “service” jobs will follow suit, not because of the lower cost base overseas, but because the manufacturing jobs that need “servicing” will be overseas. Britain will find its knowledge base following in those footsteps, knowledge moves very fast indeed.
I have no simple answer, but Britain needs to retain a manufacturing base until the justification of overseas investment diminishes. An imperfect model to look at is Japan, who strangely are investing in manufacturing capacity in the UK. Remember, as other countries create wealth their living standard rises and the “cheap-labour” argument falls away.

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Alan Shaw:

I am convinced that we are headed for a rude awakening from this current phase of activity. The Engineering Businesses upon which we used to rely for a living as a nation have long since departed along with the expertise, which had been built up over many years. The common excuse for this was “lack of productivity”. It is true that given a pure monetary definition of the phrase we were lacking in productivity, however, I believe that supported by adequate financial resources we live (may be lived!) in the most productive engineering country in the world.

We are now told we must embrace the “Knowledge Economy” in the belief that by selling our knowledge we can somehow recover from this state. This is flawed. Most new knowledge is sitting on the foundation of the new economy of licensing, which is well and truly the domain of Messrs Microsoft, Regents of the University of California …etc.. What knowledge we had is slowly, but irrevocably following the businesses, which we have given away.

ICI reached dominance by virtue of trade manipulation, and its legacy is its now ageing plants which did indeed receive massive investment (30 years ago?), but which are now assets to be sweated. No doubt the final remnants of commercial / technical information will command a suitable price on the International market.

If our new Prime Minister wishes to protect us from the final demise of the Nation, he might start to consider how little Corporate Organisations really contribute to our well-being, and how he can tackle the issue (which if my guess is right gives him sleepless nights) of lowering the exchange rate to a competitive £1 = $1. Top down approaches to business are the equivalent to monocultures, and just as vulnerable to infection.

Our media, by and large is populated by the ill informed, particularly when it comes to the issues of science and industry. We can celebrate the vast sums of money shaved off other peoples wealth by the City, and the export value of “Big Brother” but these are trivia, and very simple to replicate elsewhere.