Monday, October 20, 2008

And now for British govt support for manufacturing!

I read this piece by FT's manufacturing editor with some disbelief. It is nothing but a thinly disguised call for industrial policy- the targeting of particular sectors in manufacturing by the British government. The author argues that government ownership of UK banks provides just the right basis for such an approach:
The government will have the power to put representatives on the boards of the three banks most affected by the debacle – Royal Bank of Scotland, HBOS and Lloyds TSB. In reviewing these institutions’ lending policies, the government should ensure they take a proactive approach to supporting companies in the manufacturing sector......

There should be an emphasis on lending to youthful, poorly capitalised businesses attempting to commercialise new technologies – especially in promising fields such as zero-carbon energy production, lightweight construction materials and low-power electric motors. In the next 20 years, more UK-based customers will require specially tailored manufactured goods – in fields from home heating systems to aerospace parts – that on the grounds of transport costs and order times are made locally rather than shipped in from China. The new policy should help those UK production companies that have the skills to meet the new demands for short-turnaround “customised” manufacturing.
This is not just industrial policy but a form of directed lending. Maybe the British government can turn to the RBI for advice?

1 comment:

Arpz said...

Sir,

I just happened to stumble upon this blog of yours, for people like us, for whom IIMA has always been a fascinating dream, reading your blog was like a mini-dream come true :)

(*sheepishly confesses - hope my company doesnt mind the last couple of hours spent on reading this blog*