Transcript
Lord Bicard
We wanted someone to introduce the day from the viewpoints of industry. I don’t think we could have got anyone better than Dr. Ralph Spett, who I hope will join me in just a moment. Ralph was made CEO of Jaguar Land Rover just last year and also in the same year appointed a non-executive director on the Tata Motors board. He has a lifetime experience in the automotive sector, worked for BMW for 20 years, worked for Ford Motor Company.
As I say, I don’t think we could have got anyone better to introduce the day from the perspective of industry. Ralph, over to you. Thank you.
Dr Ralf Speth
Good morning and, Lord Bichard, thank you very much for your kind introduction. I must also congratulate the Design Council for organising the summit about how design in all its elements can make a vital contribution to economic growth in the UK and around the world.
Lord Bichard is regarded justifiably as the leading authority on how design can contribute to industrial leadership. He has set out five rules for design. Some of you might know about the five rules. Now, to me, the most important one of the five rules is the one where he says, if you think good designing is expensive, you should look at the real costs of bad design and these costs cannot be underestimated.
According to our industrial body, the Society of Motor Manufacturers and Traders, the automotive sector contributes £10 billion of added value to the UK and accounts for one eighth of UK exports by value and those exports have jumped by 35% over the last decade.
The Jaguar Land Rover revenue and export markets in 2010 was approaching already £8 billion, supporting the UK balance of trade and export-led recovery. Those figures reflect the real value creation when manufacturers, suppliers, dealers and academic institutions supplying high-qualified graduates all work together very, very closely. And that is where design has a vital role really to play.
By this, I do mean not the poorest definition of design where we turn industrial artwork into commercial reality, but instead I’m talking about how we design all our processes, how we design the research and manufacturing, how we design the training, there recruitment plans, the personal skills. And how do we design, at the end of the day, the relationship with dealers and ultimately the relationship with our customers?
So design as we see it underpins everything we are doing in our product creation process. It is about value creation and innovation, generating the right economic return in order to justify further investment for technology, innovation, product and, at the end of the day, value for Britain and value also stimulating additional jobs.
Ultimately, design is about solving some of the most challenging problems we are facing in the industry today. And what we see today – or, should I say, shape today – is the biggest paradigm shift in the automotive industry at all [?]. And to be precise, you can see more or less three major paradigm shifts.
Firstly, the first shift I see and that’s a shift I call proliferation. For decades we have been observing a concentration of the industry. Experts predicted that by 2015 only ten to 15 real players will survive. Now, today we are well far away from that and the reason is, more and more players have originated in emerging markets like China and India. And in that context, one thing goes without saying. Good design is and will be one crucial element, one strength to compete against new players.
Second paradigm shift; this paradigm shift takes place in the context of technology. In many areas, the silver bullet does not exist any more. Instead of having just one choice of technology, we see the increasing competition and coexistence of multiple technologies. Think, for example, of aluminium, lightweight architectures, the use of carbon fibres and plastics materials to reduce weight. Or think of new ways to use recycled materials. Or take, for instance, car power trains.
Once power trains; that was the stable backbone of every OEM. Today, power trains have become a technology bet [?]. Studies predict that the market will, and the market revenue will double in the next years from round about 200 billion per year right now, to 500 billion per year only in the area of power train.
And this will open up, this opens fantastic opportunities for smaller and/or new players. At this very moment the cards are being reshuffled and the UK can be at the forefront of this development.
So our collaboration, for instance, with Pladenchips [?] is an excellent example, well, it’s a spin-off for that trend. The innovative range-extended technology gives us a lot of freedom for our designers, who are [?] the new design language, and can be used for modern mobility, for cars in the mobile area, but can also be used for a stationary approach. There are huge opportunities just coming out of this new approach.
And the third paradigm shift I see, in the area of consumer habits. Connectivity is the catchword for a whole generation. But wasn’t it the revolutionary design and the usability that helped Apple to establish its products as an industry benchmark, admired by consumers but also by customers likewise? You see, I also play with this kind of tools.
And out of that reason, it’s not only in the automotive industry. It’s also really covering the whole industry. Design of not only the products but also the services around will become even more important.
And that is true, by the way, today as it was when legendary cars such as the Jaguar E-Type first hit the market half a century ago. And it’s certainly true today for our breakthrough products at Jaguar and Land Rover, with award-winning XJ 08F [?] or the segment-defining Range Rover or now the new Range Rover Evoke.
In a global industry defined by intensive competition, there’s simply no place to hide for badly-designed products. This is true not only for cars, this is true for consumer electronics, it’s true for household goods and it’s true for the delivery of public services. And later today, you will hear from experts in each of those sectors about how design is changing the way they do their business. And you will hear from government ministers about the contribution good design can make to the British competitiveness.
It’s my strong belief that outstanding design does give the British industry a clear advantage. Now, some of you might question my British credentials and you are right, it’s true. My management background is more in Saxon than Anglo as I have spent most of my business career in Germany. But Britain and Germany are both pioneers of industrial design. We have a common perspective when it comes to redefining the importance of design. And we see a direct link between good design and value creation; value creation for our people, for the corporation, the region and the nation, at the end of the day.
Jaguar Land Rover, for instance; we are currently employing more than 21,000 people. This year we have created already 3,000 new jobs and last month we had 800 new starters. And we will see in some months to come 300 new graduates starting in our company. That’s record for us! But good design helps and waves [?] through every recession.
And this is also, by the way, the reason why we can sustain two state-of-the-art design centres in the UK. And you will hear later from Ian Callum [?] and Gerry McGovern [?] about how we design our products.
Now, this is part of the value creation of which design is a core element. And it will help us, at the end of the day, to introduce new products in new segments, for new customers and, by the way, for the world.
The automotive business is like any other. The global approach changed but also, the global demographic landscape changed. Consumers want better quality and better technology, all of which relies on the highest level and execution of design.
And this expectation is no longer confined to the developed markets of Europe and America. Analysts at Redbourne [?] Partners calculate that premium car sales in China, for instance, grew by 45% and 70% only in the very last year.
I see your sign and I’ll speed up.
And McKinsey estimated that, for instance, this new premium approach in China is not only for cars. Cars will be, grow tenfold over the next year but also the premium businesses can make a lot of march [?] in there and it’s us, at the end of the day, the premium European car makers and luxury consumer brands, that are meeting these demands.
And design is therefore so critical in everything we do. It enables us to produce product that capture customer imaginations around the world.
Unsurprisingly, all of this will require significant investment. That is why Jaguar Land Rover, for instance, is investing round about 1.5 billion per year in product creation and in which design plays a major role, in order to deliver for the new product actions over the next five years.
And to sustain this pace of development, to sustain this power, we need a business environment that supports innovation and technology and is a design-led culture. This is simply essential for advanced manufacturing and the prerequisite to stay in the UK and/or to attract new investment for the UK.
We need a stable political and economic framework and favourable foreign exchange rates for the export-led industry in addition. That’s crucially important. And we need the right skills and training to ensure that we continue to invest in research and development.
We at Jaguar Land Rover, we are spending millions for research, including, for instance, 100 million investment in the very, very unique approach with the Warwick Manufacturing Group where we work together in an open and transparent way with suppliers and the academic institutions to develop the next generation of cars.
And if the UK really wants to strengthen its international design position, we need a steady supply of high-qualified graduates with skills in science and technology and improve the existing, traditional skills and bring new impetus to expanding new disciplines, like mechatronics, like shemitronics [?]; totally new areas.
For all of the companies addressing today’s summit, design creativity is central for their success and as businesses, we recognise that future profitable growth depends on people and processes and products that are designed to the highest level of innovation and excellence. And there’s clear evidence, by the way, that there’s a correlation of investment in research and development and the overall success of the company.
And every penny invested generates over-proportional value. So designed value creation delivers leading-edge results for all of us.
So my message is simple. We, the industry, I guess we know how we can meet these expectations and deliver really powerful performance. And if government promotes the right economic structures, I’m quite sure that together, we can make it. Thank you.