Memorandum 54
Submission from Finnmeccanica
PUTTING SCIENCE AND ENGINEERING AT THE HEART
OF GOVERNMENT POLICY
1. INTRODUCTION
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:
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.
2. FINMECCANICA'S
POSITION IN
THE DEBATE
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.
3. BALANCE OF
INVESTMENT CRITERIA
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.
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.
4. CONSULTATION
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.
5. SUMMARY
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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