Putting Science and Engineering at the Heart of Government Policy - Innovation, Universities, Science and Skills Committee Contents

Memorandum 54

Submission from Finnmeccanica



  We strongly support the proposed Direction Government intends to take in relating economic growth to a clear policy of investment in science, innovation and engineering which enhances the competitive position of the UK. Indeed it is an essential policy in this time of economic downturn as the major contributor to sustainable future growth. It is our view that the success of such a policy is dependant on the collective agreement (Government, Industry and Academia) on the criteria by which such balance of investment judgements are made. This should be developed from the outline principles tabled by Lord Drayson, namely:

    —  Where the UK has a clear competitive advantage.—  Where the growth opportunity over the next 20 years is significant.

    —  And where the UK has a realistic prospect of being No 1 or No 2 in the world.

  Further, to deliver substantive economic impact we emphasize the engineering dimension in science, innovation and engineering as the effective means of exploitation. Creating a world class UK capability where the value in terms of revenue and employment is generated offshore through licensing is very much of second order impact. An "end to end" strategy is required whereby scientific research, applied technology and innovative engineering enable growth both in the national scientific and technical skill base and in the manufacturing capabilities needed for internationally competitive solutions.

  In section 3 we offer our views as to the type of criteria which could inform such balance of investment judgements.


  Today Finmeccanica is a £13 billion Turnover Corporation with major industrial footprints in the UK, US and Italy. We operate internationally in the Defence, Aerospace, Security, Transport and Energy sectors and some 12% of turnover is directed to Research & Development. In the UK we have around 5,000 scientists, technicians and engineers from across the scientific disciplines and we generate around £600 million of export revenues from our UK businesses. We have strong relationships with UK universities and technology providers working closely with regional development agencies to generate local centres of excellence. In particular our recent acquisition of DRS Technologies increases our US footprint to some 12,000 people providing both access to the large US budget and direct familiarity and participation in innovation models developed between US Government and Industry.


  If the overriding consideration is to be globally competitive in readiness for an economic upturn then timing, differentiation and routes to exploitation are key. This suggests the following:

    —  An objective calibration of current positioning by market sector to establish existing economic contribution and evaluate the growth potential of further focused Research & Development.

    —  An assessment of UK Government spending priorities by department to determine where UK market drivers and therefore solutions have international resonance. Thereby recognising and potentially directing UK Government and Industrial spend in a manner which delivers domestic solutions capable of generating significant and sustainable export revenues.

    —  An evaluation of those technology clusters which will feature repeatedly in delivering world competitive solutions. Potentially establishing centres of excellence between Government, Industry and Academia around such clusters to create critical mass, avoid duplication and recognise the interdependence of core skills. Examples of such COEs would include:

      i.  Sensors and communications networks.

      ii.  Information and knowledge management.

      iii.  Autonomous systems and robotics.

      iv.  Advanced materials.

      v.  Life sciences.

  Our recent experience in the Defence and Security sectors has confirmed to us the key role technology plays in differentiating solutions and the importance of a multidomestic industrial footprint (particularly access to the substantial US market) to maximise exploitation of UK generated intellectual property. Further, and perhaps counter intuitively, successful industries in these sectors are having to adapt to counter rapidly developing and diversifying threats fostering a new approach to industrial/academic partnering improving agility and reducing response times.


  As stated we believe the proposed policy is both desirable and necessary. Despite the despondency surrounding economic downturn there are clear reasons to believe that such a policy could be successfully developed and implemented:

    —  The UK at the individual and institutional level has a track record of innovation.

    —  Top UK universities are recognised internationally as best in class. This pursuit of excellence needs to inform and restructure secondary and primary education in science.

    —  Some UK industries are globally competitive, have established international footprint and are capable of leveraging UK R&D into larger markets.

    —  Industry and academia have developed models for collaboration. The role of large science based industry in the UK in partnering with universities and SMEs will be key to growth given the lack of freely available capital and credit from third party investors.

  In terms of consultation methodology whilst we believe that a wide solicitation of views from Government, learned societies, Industry, Academia etc. is a necessary starting point it is important to rapidly converge the debate around key market sectors. "End to end" stakeholders from R&D to exploitation need to group together to develop and cost strategic plans which will in turn enable UK balance of investment priorities to be effected. A useful by-product of this would to identify where and how different sources of Government R&D funding (universities, MoD, TSB etc.) might be better coordinated and directed to improve the gearing between investment and return at the national level.

  It is perhaps premature to be definitive about those sectors which would benefit and those which will lose. However successful sectors will likely exhibit the following characteristic:

    —  Solving the UK's problems also addresses the needs of key export territories (for instance tackling the sustainability and environmental challenges being faced).

    —  The "solution" involves leading edge technology but also innovative and cost effective manufacturing and a route to international markets and international collaboration.

    —  The high cost of entry to competitors in terms of human and physical capital supports the sustainability of the sector in the UK.

    —  The sector can demonstrate that significant added value (revenue and employment) will result from achieving clear technological differentiation.


  As a major employer of scientists, technologists and engineers in the UK with strong links to 30 of top UK universities we remain highly motivated to support the success of the proposed policy. Our graduates span the scientific disciplines from physics, maths, chemistry and engineering to bio and life sciences and we recognise their interdependence in delivering world class solutions. Within Finmeccanica we are developing a further initiative to foster innovation across our group and with our partners. This was briefed in outline to Lord Drayson during a recent visit and we would welcome the opportunity to expand on our actions in this area which we believe are entirely in sync with Government thinking.

April 2009

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