Monday, 4 May 2009

Lies, Damned Lies and Percentages

Disraeli’s observations about statistics came to mind when I came across some interesting figures. The problem with percentages and averages is that they leave more questions than they answer.

Apparently 80% of Americans never read a book. We all nod wisely with a ‘thought as much’ look. Actually, these days most people over here could be the same. That doesn’t mean they don’t read newspapers, magazines, internet articles, watch educative programmes, or dip into the text book they are studying for their course. Perhaps they don’t have the time.

More than one million Britons have never left their home town!  There’s a statistic that is specific  (as long as you know there are around 61 million of us now).

The average wage is now just shy of £500 (£25000 pa) per week depending what you take into account. A ‘Typical’ wage is actually about £85 below that, because around two thirds of the working population don’t earn the average wage. Then of course the average wage for a particular area may be lower still. I think an average wage in South East Wales is probably more like £400 per week (£21000) whereas if you lived in South London it would be higher, and needs to be. I have no basis for that except observation, but the point is made.  Averages and percentages need clarification.

So too with the state of the country. The percentages are trotted out and we all nod wisely with a ‘thought as much’ look. Manufacturing is in freefall decline and we are no longer a manufacturing nation. Well, actually until the latest blip in world economy Britain was more of a manufacturer than ever.  Services now make up 75% of our economy against 54% in the early 1970s. However the economy has grown by 4 times in 60 years and manufacturing has grown in real terms while not being as big a percentage of the whole as it was. We produced twice as many cars in 2007 than we did in the 1970s, when we had the big names still. 

The share of the economy attributable to manufacturing is actually greater than that of France or the US, despite sneering remarks by the French President lately. Our level of Efficiency of Manufacture is also greater than theirs. Half our exports are manufactured. We are world leaders in chemicals, electrical equipment, optical equipment, pharmaceuticals, and our aerospace industry is the largest outside the US. 

Most of our stuff is high tech, and the household names are no longer there with the same force. Often lamented is the flow of work to Malaysia and China that we used to do here. Dyson took his vacuum cleaners to Malaysia.  However they are still exported from Britain and bring in £500m of foreign currency a year. Offshoring  in this way usually benefits the economy in the longer term.

International investment in manufacturing in this country outstrips any other EU country . In 2006 we received £26bn in this way, while Germany for example received £3bn.  We do not have the household names as we once had which is a pity for our pride, but the likes of Honda, Toyota, Nissan, GM, Peugeot, BMW,  and Ford  have all seen fit to make cars here.

The problem with having such a high tech export geared manufacturing sector is that it is vulnerable to a global depression as we are seeing now. The car industry has suspended operations altogether in some cases while everyone guards their wallet.

This leads me to a strong business point. The apparent collapse of things is always difficult. When a large steelworks at Consett closed the town took 10 years to recover its composure. I was at a heavy engineering company recently. When I asked where they got their work, they looked a little vague and told me that 90% of the work used to come from Corus. The problem with all of this is the Change in Circumstances. The ones going out of business are often the dinosaurs who are too entrenched in their past to react quickly to their market. To use a modern Americanism, ‘get used to it!’

We have seen plenty of encouragement for Wales to get entrepreneurial and become innovative and make the most of individual inspiration. They are all saying the same thing. Change is a certainty. Don’t change things for the sake of it but react, take advantage of new circumstances, check your old ideas to see how they still apply, reinvent the approach and change the packaging.

If it is dawning on you that your business is stuck in its past glories, have some outside help. A good consultant can give you that. Development is often a package of the best taken forward and dropping what is no longer effective. There may even be government help for consultancy with a purpose. Let Bob Shepherd Associates see what can be done for you.


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