The Guest Blog

CEO Blog: Our Greatest New Threat

I’m an engineer. I identify a problem and develop a solution.

I’d like to think that the success of companies like Dyson – based in the UK– have helped the country in more than a few ways, including boosting its exports and tax revenues.

Whether at home or abroad, politicians don’t really need me to identify new problems – they have enough of those. But where can I match my passion for a cause with some constructive ideas? I think it’s worth talking about.

Here’s the problem.

Both the US and UK economies rely too heavily on selling services. Financial services in particular, as the last two years have shown very dramatically. We all know that many products can be made cheaper and faster overseas. But now the large manufacturers such as China, India and South Korea are moving up the value chain.

The threat is no longer low-cost manufacturing; it’s high-tech and ideas. And the proof? As of this year, China has overtaken Germany as the world’s biggest exporter. And it’s not limited to less expensive products.

So, why have I decided on now to bang the drum? Well, now is the opportunity for change: we’re coming out of recession; our service-dependency has hurt us badly; and in the UK, there’s nothing like an election year to focus the minds of those who can change things.

In the UK, I’ve just produced a reportto help shape politicians’ thinking. The Conservatives have backed it and I’m hoping others will take my ideas on board. It’s about inspiring, supporting and investing to make best use of some superb resources already at our disposal. It’s not, however, about a quick fix, having an idea is easy, but making it work takes time.

The UK has a highly motivated workforce; the universities and academics are fantastic. We don’t always make the most of these - of which science and engineering are at the heart. I hope some of the ideas in Ingenious Britaincan be explored in the United States, too – as a society, a greater understanding of the importance of engineering; and a commitment to programs that excite students about science, math and technology.

From primary school pupils to graduates, teachers to government, we need more people to take up science, engineering and design. These are exciting and rewarding careers which can contribute hugely to our society and our economy. Government needs to take the lead in steering our brightest and best in this direction.

Educators should look again at how universities are funded and assessed. These places need the freedom and flexibility to identify what students and industry wants – such as shorter courses with industry experience. Potential science and engineering undergraduates need more access to industrial scholarships. Student loans might be written off. Postgraduates should be paid properly for their research.

Further down the line, access to capital is crucial. Government must examine better routes for debt financing to reach high tech companies. If possible, this should involve using the power of government guarantees to encourage lenders – existing banks or new entrants – to extend credit to innovative small businesses.

Once properly up and running, companies – both small and large – need more significant tax credits for research and development. In the UK, these should be increased by as much as a third to 200%. Such a move could have a huge impact on a company’s investment decisions and would send a clear signal to business leaders about the government’s belief in science and technology.

And what do I know, apart from making vacuum cleaners? Well, Dyson’s about a bit more than that these days. We make all sorts of new technology – fans, digital motors and more in the pipeline. That’s the point about R&D: we’re constantly looking at new inventions for the long term. When it comes to major UK companies filing patents, only Rolls-Royce is ahead of us.

We also know a bit about selling overseas: eight out of ten of our machines are exported. They reach 49 countries, with the US being our biggest market. There’s no doubt that production in Malaysia has helped us to expand faster – we employ more than 1,200 people in the UK, 300 in the US and 2,500 globally.

Dyson was built from scratch over 30 years. Parts of that time were slow and painful, but I know that the pace was quickened by employing graduates with the right skills and investing in R&D.

We need to make it much easier for other businesses to do the same.

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Sir James Dyson is the founder of Dyson Vacuums, based in the United Kingdom