Keeping important technologies under British (and Western in general) control

Yokel

LE
Not everyone will like this as it a) advocates Government intervention in business, and b) is from a European Union official.

Vestager urges stakebuilding to block Chinese takeovers

Margrethe Vestager, also executive vice-president of the European Commission, told the Financial Times: “We don’t have any issues of states acting as market participants if need be — if they provide shares in a company, if they want to prevent a takeover of this kind.”

European companies have long been in the sights of Chinese rivals, but the sharp economic downturn caused by the coronavirus outbreak and subsequent steep falls in share prices across the continent have increased the potential for overseas bids. “It’s very important that one is aware that there is a real risk that businesses that are vulnerable can be the object of a takeover,” Ms Vestager said. “The situation now really underlines the need so we work really intensively. This is one of our main priorities.”

She cautioned against rushing out measures, saying the best solution would be to draw up regulations that acted as a deterrent. “People are more than welcome to come do business in Europe but not to do that with unfair competitive means. It has to have this double function.”
 

Yokel

LE
Julian Lindley -French: Who will 'win' COVID-19?

COVID-19 has revealed Britain to be a hollowed-out, ‘just-in-time’ state in which redundancy and resiliency have been abandoned by successive governments in favour of a hand-to-mouth state that effectively survives from day-to-day. A lack of forward planning and capacity caught the British state off-guard (as it has before in history). Thankfully, a kind of latter day Blitz mentality, allied to an ability to adapt and innovate by those on the front-line of healthcare seems to be having an effect.


Not at all good.

There is a certain tragic charm in the way European leaders have embraced a kind of naïve, China-empowering globalism given it was Europe that invented Realpolitik, although Sun Tzu might beg to differ. Therefore, if anything has to change now as a consequence of this crisis it is Europe’s rush towards vulnerability must end. Like pandemics before it COVID-19 will accelerate existing strategic, political, economic, even social change, but it can also act as a wake-up call for Europeans to finally summon up the political courage to face such hard reality

Talking of technology and supply chains

Second, a shared Allied recognition that the relationship with China has become dangerously unbalanced with too many Western supply chains now dependent on a country that is as much predator as partner. Third, the future transatlantic relationship and European cohesion need to be seen against the backdrop of such challenges. Fourth, and perhaps most important of all, Europe’s intergovernmental institutions need to become far more robust in the face of shock.

Where to start? During the Cold War there was a list of prescribed strategic metals that Western powers insisted must remain under their control. One lesson from this crisis must surely be the need for the West, Europe in particular, to regain control over certain ‘strategic’ technologies and core medicines vital to a forward looking concept of comprehensive security across the human security-national defence spectrum. Faced with such a determination China may well decide to be less predator and more partner.
 

Yokel

LE
As this is about the policies of the West generally and not just Britain, I would like to hear the views of people like @bobthebuilder and @Steamboat.

The list of sensitive and dual list materials and technologies subject to export controls is here.

Many of the definitions specified in limits of component or equipment performance - speed, bandwidth, operating temperature limits, physical size etc.

I image (hope) that Western government including our own have a corresponding list of important technologies and industrial capabilities that we need to keep control of and access to.
 
As this is about the policies of the West generally and not just Britain, I would like to hear the views of people like @bobthebuilder and @Steamboat.

The list of sensitive and dual list materials and technologies subject to export controls is here.

Many of the definitions specified in limits of component or equipment performance - speed, bandwidth, operating temperature limits, physical size etc.

I image (hope) that Western government including our own have a corresponding list of important technologies and industrial capabilities that we need to keep control of and access to.
The US is already discriminating against the Chinese (Huawei), we have had them steal and copy our technology for far to long. Now that we have a bipartisan consensus that those people are the enemy, just like the Soviet Union of old. The US will bring back our critical manufacturing base from China. It will take time but the course has been set.

It would be nice to see the old alliances follow suit, but I don’t count on that post COVID. So I would imagine much less cooperation with others in the future when it comes to technology transfer.
 

Yokel

LE
The US is already discriminating against the Chinese (Huawei), we have had them steal and copy our technology for far to long. Now that we have a bipartisan consensus that those people are the enemy, just like the Soviet Union of old. The US will bring back our critical manufacturing base from China. It will take time but the course has been set.

It would be nice to see the old alliances follow suit, but I don’t count on that post COVID. So I would imagine much less cooperation with others in the future when it comes to technology transfer.
Enemy is a very strong word, and unhelpful for peacetime diplomacy.

Re-shoring of manufacturing is not just an American phenomenon, companies across the World have noted rising shipping costs, issues with quality, lack of responsiveness to customer demands, and problems with intellectual property being copied. Add to that the demand for local jobs, and the politics and PR issues due to environmental and human rights issues.
 
Enemy is a very strong word, and unhelpful for peacetime diplomacy.

Re-shoring of manufacturing is not just an American phenomenon, companies across the World have noted rising shipping costs, issues with quality, lack of responsiveness to customer demands, and problems with intellectual property being copied. Add to that the demand for local jobs, and the politics and PR issues due to environmental and human rights issues.
But why mince words and pretend anymore? We are in an ongoing economic and cyber war with them. We are actively and with great haste preparing for a shooting war against them. They have conducted a mass espionage campaign against my country which is still ongoing.

Through disgusting social practice or more likely government sponsored neglect they have released a pandemic on the world. Killing 45,343 Americans thus far, causing trillions in damage to the point States and citizens will be suing the CCP. I think the relationship is pretty straightforward and defined from this point on.

Decoupling over the next few years will happen by government decree and disgust for the CCP and country in general. Sino American relations are in the tank, and being to close to that country anymore will be a bit of a taboo.
 

Yokel

LE
I have talked about the importance of being able to rapidly produce things such as complex Printed Circuit Boards, and have spoken of firms local to me being involved in the effort to produce ventilators and PPE. One such firm is Graphic PLC - not so far from me.

Their efforts were covered in the local (theirs - not mine) paper:

Mr Pike explained: “On Thursday night (April 9) at 8pm we were set a challenge by our customer to deliver a new set of prototype boards to be delivered to Scotland by midnight on Good Friday (April 10).

"The boards were completed in record time at Graphic and couriered into Exeter Airport.

"Due to the urgency of this project the end customer had organised for Exeter Airport to remain open long enough to accept their specially chartered plane and on picking up its urgent cargo it flew back to Scotland where a team of Electronic Engineers worked through the night to assemble the boards and have them ready for testing on the Saturday morning.

"This was such a success that the production was released and Graphic staff worked tirelessly during the rest of the Easter weekend to continue to produce 10,000 boards as soon as possible.


If sovereignty is not only the ability to pass and enforce our own laws, but the ability to respond to crises and threats, then it must include the security not just of major companies and big names, but suppliers of PCB, electrical components, cable assemblies, sheet metalwork, GRP moldings, hoses, vales and hundreds if not thousands of other things.
 
I have talked about the importance of being able to rapidly produce things such as complex Printed Circuit Boards, and have spoken of firms local to me being involved in the effort to produce ventilators and PPE. One such firm is Graphic PLC - not so far from me.

Their efforts were covered in the local (theirs - not mine) paper:

Mr Pike explained: “On Thursday night (April 9) at 8pm we were set a challenge by our customer to deliver a new set of prototype boards to be delivered to Scotland by midnight on Good Friday (April 10).

"The boards were completed in record time at Graphic and couriered into Exeter Airport.

"Due to the urgency of this project the end customer had organised for Exeter Airport to remain open long enough to accept their specially chartered plane and on picking up its urgent cargo it flew back to Scotland where a team of Electronic Engineers worked through the night to assemble the boards and have them ready for testing on the Saturday morning.

"This was such a success that the production was released and Graphic staff worked tirelessly during the rest of the Easter weekend to continue to produce 10,000 boards as soon as possible.


If sovereignty is not only the ability to pass and enforce our own laws, but the ability to respond to crises and threats, then it must include the security not just of major companies and big names, but suppliers of PCB, electrical components, cable assemblies, sheet metalwork, GRP moldings, hoses, vales and hundreds if not thousands of other things.
If you go down that route far enough, you will find yourself needing to have an almost entirely self-contained economy, like North Korea.

I think you have to look at not just what gets used, but also how much you need for critical purposes, how readily you can get it from multiple independent sources, and how readily you could set up production yourself if you absolutely had to.

One defence program that Canada had (I'm not sure if it is still being operated) was to figure out which companies could produce critical war material (e.g. shells), and then provide up to one half of the capital cost of the machinery to produce it. The company could then use the equipment to produce products for the civilian market, but their production capacity was available to be commandeered for war production when required. The equipment could not be sold or tranferred abroad without government permission, it being half owned by the government.

I don't know if the UK has something like this, but it's probably closer to what you are looking for.
 

Yokel

LE
It certainly sounds like a way of getting investment in manufacturing - something our retarded leaders have had an aversion too for decades.

I just stumbled on this via Henry Jones' Twitter feed, and an incidental link to the Twitter feed of Britten-Norman (about an aircraft being readied in the colours of the Falkland Islands Government Air Service).


So are manufacturers and maintainers of aircraft (and other types of vehicle) key workers? Or component suppliers?
 

Yokel

LE
From Make UK: Manufacturing Our Road To Recovery: The 3 Point Plan

This crisis has demonstrated the vulnerability of supply chains and the
consequences of an underinvested manufacturing base with limited
domestic capacity to produce critical products. As companies increasingly
consider reshoring, the crisis has also highlighted the increasing
importance of export success to the UK economy. While the sector has
responded magnificently to the challenge, there are things we must do
now to protect ourselves for the future. Together, manufacturers and the
economy need:

A comprehensive supply chain mapping project: to ensure we have a greater understanding of their vulnerabilities, including transport/logistics, enabling the sector to effectively build resilience and mitigate pinch points in a supply chain when there are external shocks to demand and supply.

A process to identify critical products (and components)
: there is also a need to identify the domestic capacity for these, and put in place plans to ensure they are provided.

Additional fiscal incentives to ensure critical industrial R&D capacity and spend is safeguarded: as well as a joint Government and industry effort to promote and support industrial digitalisation as a means of improving resilience.

A Global Supply Chain resilience programme: which keeps markets open and predictable, and maintaining a favourable business environment, will be critical to spur renewed investment and confidence. International trade
rules allow countries to take positive actions to deal with improving trade measures. UK Government should agree co-ordinated action with key economic partner countries to maintain current trade flows and remove administrative restrictions.
 

Yokel

LE
BBC: UK Government draws up plans to rescue key firms

The bailout plan, named "Project Birch", was mentioned by Transport Secretary Grant Shapps in Parliament last week when discussing the future of the aviation industry.

The state could also take stakes in companies, reports the Financial Times.

HM Treasury said bailouts would only be considered as a "last resort".

In a statement, a Treasury spokeswoman said: "We have put in place unprecedented levels of support to help businesses get through this crisis. Beyond that many firms are getting support from established market mechanisms, such as existing shareholders, bank lending and commercial finance.

"In exceptional circumstances, where a viable company has exhausted all options and its failure would disproportionately harm the economy, we may consider support on a 'last resort' basis.


"As the British public would expect, we are putting in place sensible contingency planning and any such support would be on terms that protect the taxpayer."
 
From Make UK: Manufacturing Our Road To Recovery: The 3 Point Plan

This crisis has demonstrated the vulnerability of supply chains and the
consequences of an underinvested manufacturing base with limited
domestic capacity to produce critical products. As companies increasingly
consider reshoring, the crisis has also highlighted the increasing
importance of export success to the UK economy. While the sector has
responded magnificently to the challenge, there are things we must do
now to protect ourselves for the future. Together, manufacturers and the
economy need:

A comprehensive supply chain mapping project: to ensure we have a greater understanding of their vulnerabilities, including transport/logistics, enabling the sector to effectively build resilience and mitigate pinch points in a supply chain when there are external shocks to demand and supply.

A process to identify critical products (and components): there is also a need to identify the domestic capacity for these, and put in place plans to ensure they are provided.

Additional fiscal incentives to ensure critical industrial R&D capacity and spend is safeguarded: as well as a joint Government and industry effort to promote and support industrial digitalisation as a means of improving resilience.

A Global Supply Chain resilience programme: which keeps markets open and predictable, and maintaining a favourable business environment, will be critical to spur renewed investment and confidence. International trade
rules allow countries to take positive actions to deal with improving trade measures. UK Government should agree co-ordinated action with key economic partner countries to maintain current trade flows and remove administrative restrictions.
Read the above and weep.

Have they only just figured this out !
Wtf have they been doing since 1898 ?

I would bet good money this self same organisation was publishing grand statements urging quite a contradictory position, in my lifetime.
 

Flight

LE
Book Reviewer
2. As I pointed out previously, the fact that the ownership of an asset is foreign is neither here nor there.. It is the location of the assets, both plant, material and staff that is crucial. This is what you need to keep on shore, either by economic or fiscal inducements and controls.
Sounds rosy, but when the 'cost' of government projects takes no account of the tax back it clearly becomes a farce.

Unless the lowest foreign bidder is 20%, probably more, cheaper than a UK based one it is only cheaper in isolation and on paper. I doubt anyone in a position of decision making power could be thick enough not to realise this.

Frankly it isn't just the CCP who are our enemies. It would be well, if undiplomatically, applied to many of our unthinkingly globalist decision makers.

If we have had any form of industrial policy since Blair then globalist rather than domestic describes it beautifully.

Course added together all of the ecowank, health and safety bollocks, furrin wurkers are betta, cheaper abroad and the rest could all be coincidental and unconnected.

Or you could take the once is happenchance, twice is coincidence and three times is enemy action route, in which case it isn't too hard to make a case for us having real enemies for years or decades,
 

Yokel

LE
In 2018, the Centre for the Protection of National Infrastructure, working with the National Cyber Security Centre, published guidance on the topic of supply chain security for anyone who cared to read it.

Supply chain security collection

I wonder how many small to medium sized companies, that are not List X and do not directly do sensitive work, payed heed to the advice?

This American paper is also worth a read.
 
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Yokel

LE
One important area of capabilities that has been increasingly outsourced is electronics manufacture and in particular semiconductor manufacture.

Civitas report - Selling Circuits Short

Electronics is a strategic capability that any modern country must maintain and develop to play a role in future growth markets and industries. Hence industry and government should work together in ensuring this vital, but often invisible sector is well equipped to compete and grow in the long term.
 
One important area of capabilities that has been increasingly outsourced is electronics manufacture and in particular semiconductor manufacture.

Civitas report - Selling Circuits Short

Electronics is a strategic capability that any modern country must maintain and develop to play a role in future growth markets and industries. Hence industry and government should work together in ensuring this vital, but often invisible sector is well equipped to compete and grow in the long term.
All that does is pick part of the supply chain.

Unless you control the entire thing end to end there will always be strategic pinch points that can be disrupted by natural events, or targeted by sanctions.

Apart from the rather ambitious Schweinfurt raids which targeted a perceived bottleneck for ball bearings in WW2, there have been recurrent incidents where individual commodities have suddenly become supply weaknesses.
The 1970's OPEC oil embargo had immense effects far beyond those intended by OPEC.

In electronics terms, the 1995 Kobe earthquake took out one of the world's few semiconductor factories. Integrated circuit prices soared, RAM chips became more valuable than gold, RAM raiding of offices by thieves for chips became a thing. Although that capacity gap was later filled, I suspect there are others lurking unseen.

My point is that if you want a hermetically sealed supply chain, you need to identify EVERY input along it, and secure it. Some are going to be beyond your national control, some would just be uneconomic to duplicate, some are just impossible to duplicate.

Ultimately though, it is not going to be possible to totally armour the supply and manufacturing chain end to end.
Resilience can be designed in, but not total resistance.
 

Cold_Collation

LE
Book Reviewer
Whilst I agree with your sentiments, I want folk to buy British goods and services because they are the best, and to persuade the rest of the world to do the same..!

Goods become "good" because they are either high quality or value for money, ideally both! I'm not really bothered whether what we sell is heavy or light manufactured goods or intellectual services such as consultancy or education provided it fits the bill of "quality" and covers the cost of what we want to pay ourselves. We need to be much harder on people who produce rubbish! Reputation will make you a sale, but it is quality that will get you a repeat sale. For far too long, we have been trading on our reputation, and failing to deliver.

You cannot legislate for quality! The whole EU standards thing is a chimera! Bureaucratic administration of quality is the least economic way of producing quality goods, and is always eventually bypassed by people who do not play the game. The Market is the only determiner of quality, but the Market must be free to choose... government controlled procurement is anything but free and has largely caused the mess we are now in...

Add in political interference such as Climate Control and Health and Safety and is it any wonder we cannot compete.. We do need to address these issues, but society, both civil and industrial, needs to deal with it at the lowest level.. not allow governments to use them as an excuse for generating tax revenue...!

... basic Macro Economics!
EU standards?

We bought a new vacuum cleaner last week. This, after speaking to the local repair guy.

Quality?

The EU de-rated vacuum cleaners to ‘help the environment’. The problem is that the lower-powered models burn through their motors in a couple of years. And end up in a skip.

It’s a bit like toilet cisterns with reduced capacity to save on water... but you have to flush twice.

Or labels in clothes telling us to wash at 30 degrees. Except clothes then stink, so you throw them out.

It takes 1,000 litres of water to make a shirt. Many places have become denuded because of cotton production.
 

HE117

LE
EU standards?

We bought a new vacuum cleaner last week. This, after speaking to the local repair guy.

Quality?

The EU de-rated vacuum cleaners to ‘help the environment’. The problem is that the lower-powered models burn through their motors in a couple of years. And end up in a skip.

It’s a bit like toilet cisterns with reduced capacity to save on water... but you have to flush twice.

Or labels in clothes telling us to wash at 30 degrees. Except clothes then stink, so you throw them out.

It takes 1,000 litres of water to make a shirt. Many places have become denuded because of cotton production.
All situations where the change has been imposed to meet a minority political agenda, usually by incompetent bureaucrats who are working to short term agendas (even though they say they are not...)

Real change can only come about through markets. Even in highly controlled command economies such as the Soviet one, the market continued to have overwhelming effect regardless of the most punitive attempts of the bureaucracy to control it.

The only successful way to control markets is through competition. Markets are a dynamic chimera made up from billions of decisions and the environment in which they exist. There is no way you can influence or control all of these decisions, although you can create situations where you can create trends although this is never a precise process. Much of the market depends on a degree of stability so that assumptions can be made about the future and actions can be predictive rather than reactive. You achieve this by making market elements compete, so that there is a constant presentation of good deals into the market and that players are encouraged to maintain their reputation as good buyers and sellers.

Problems come when small groups of players can dominate areas of the market and control the nature of exchanges to suit themselves. This is a well known phenomenon, and societies needs to develop (preferably non violent) ways in which to control these activities. Up to the middle of the last century, most of these controls were administered at National or Sub national levels. Following the breakup of Empires, this level has now shifted to a pan-national level, which, I humbly suggest, has both lost the plot and handed the reigns to groupings with very narrow interests. What we have ended up with are some very hollowed out structures and a society that is far less robust or resilient than it needs to be.

My view is that we are getting very near a Tower of Babel point, and that we need to find some way in which these high level market influences can be disarmed, preferably without bloodshed. We need to achieve balance and stability at a much lower level of society than we have at present.
 

Cold_Collation

LE
Book Reviewer
All situations where the change has been imposed to meet a minority political agenda, usually by incompetent bureaucrats who are working to short term agendas (even though they say they are not...)

Real change can only come about through markets. Even in highly controlled command economies such as the Soviet one, the market continued to have overwhelming effect regardless of the most punitive attempts of the bureaucracy to control it.

The only successful way to control markets is through competition. Markets are a dynamic chimera made up from billions of decisions and the environment in which they exist. There is no way you can influence or control all of these decisions, although you can create situations where you can create trends although this is never a precise process. Much of the market depends on a degree of stability so that assumptions can be made about the future and actions can be predictive rather than reactive. You achieve this by making market elements compete, so that there is a constant presentation of good deals into the market and that players are encouraged to maintain their reputation as good buyers and sellers.

Problems come when small groups of players can dominate areas of the market and control the nature of exchanges to suit themselves. This is a well known phenomenon, and societies needs to develop (preferably non violent) ways in which to control these activities. Up to the middle of the last century, most of these controls were administered at National or Sub national levels. Following the breakup of Empires, this level has now shifted to a pan-national level, which, I humbly suggest, has both lost the plot and handed the reigns to groupings with very narrow interests. What we have ended up with are some very hollowed out structures and a society that is far less robust or resilient than it needs to be.

My view is that we are getting very near a Tower of Babel point, and that we need to find some way in which these high level market influences can be disarmed, preferably without bloodshed. We need to achieve balance and stability at a much lower level of society than we have at present.
I think a problem with the EU at least is its socialist virtue-signalling.

Years ago I was the news editor on a recycling publication. It was at the time that John Gummer was called a 'shīthead' by his Norwegian counterpart.

At the time, I used to have a fair bit to do with Gummer's PA and she explained it thus: Europe was very good at signing green initiatives, such as for materials segregation post-use. People would get green credits - money - for sorting materials but, with no post-use strategies, the sorted materials would go to landfill anyway.

Therefore, there was no green benefit.

Gummer was challenging this sort of thinking but his was an inconvenient voice. He was right, though.

On quality in terms of manufacturing, I've been involved over the last few years with a major engineering event at the NEC.

There has been a lot of interest in re-shoring work to the UK. We're not the only ones doing - witness Honda and Swindon - but the uninitiated would probably get a surprise if they knew just what a good manufacturing sector we still have.

In some cases, though, we need a better determinant of true cost rather than just a market cost.

The cost of a tonne of 'X' grade of steel, for instance, might be lower if bought from elsewhere. But what is the welfare cost if a steelworks in this country closes (steel is probably a poor example but let's go with it).

If the cost of buying the foreign steel is the cost of the steel plus the ongoing welfare costs of those put out of work in this country, which is in fact cheaper?

Okay, this all starts to get a little bit socialist and it runs very close to protectionism but I think there's more traction under this post-Covid. Not only have supply lines been seen to be vulnerable but there's a lot of anger towards China at the moment over this pandemic.
 

HE117

LE
I think a problem with the EU at least is its socialist virtue-signalling.

.. we need a better determinant of true cost rather than just a market cost.
Oh indubitably..

The whole cost game is a blank canvas for any mischief maker who wishes to wield a spreadsheet or two. Far too often cost is the weapon wielded by the interest group to have their way without having to pay..

Either you load on excessive cost or you ignore the long term costs.. either way damage is done in a way that is difficult to undo.
 

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