Britain’s manufacturing base, hit by a series of high profile defections in recent years, yesterday got a thumbs-up – from Italy.
Merloni Elettrodomestici, one of Europe’s biggest white goods manufacturers, has embarked on a £60m investment programme in Britain since it acquired Hotpoint in 2002.
As the group launched a new range of cookers, washers, freezers and dryers yesterday, chairman Vittorio Merloni and Marco Milani, the chief executive of the British business, explained the philosophy behind an operation which employs 6,000 people at four plants in the UK.
Mr Merloni acknowledged the attractions of producing goods in lower cost countries such as Poland and Turkey, where Merloni has manufacturing facilities.
But he said: “The productivity you can achieve in England is not so different from these other countries through the facilities, the investment, the production organisation.”
He argued that while everyone talked about “relocation, relocation, relocation”, low cost production started with good product design. “If you design the product with intelligence and thought, you get good product at low cost.”
Companies such as Dyson, Waterford Wedgwood and Black and Decker are among those that have switched manufacturing work from Britain to lower cost centres in the far east and central Europe.
Mr Milani acknowledged that Merloni’s decision to invest £20m a year in its British operation – which includes a call centre – is helped by Hotpoint’s strong position in the domestic white goods market and by the slightly differing requirements of customers within individual markets.
But he said there were few differences between manufacturing in Britain and Italy and the cost of transporting white goods makes local manufacturing competitive. “If you are moving appliances like refrigerators it is expensive. Basically, you are transporting an empty box.” Manufacturing in very low cost locations can have other problems, such as the availability of components and raw materials, and “you can’t make products specifically for the UK”.
Nevertheless Mr Milani is keen to see Britain join the European single currency. The rate, he says, is not particularly important. “When you are investing large sums, what matters is stability. When you see 10% changes [in the exchange rate] and you are investing, it is scary.” The company would “definitely” like to see Britain sign up for the euro, he said.
From The Business Guardian