Text of a Talk to the Advanced Powertrain Symposium Birmingham City University

I would like to thank Birmingham City University for inviting me to talk to the Advanced Powertrain Conference and to offer my congratulations to all the technical participants for some fascinating presentations about future technology and cars. And my special thanks go to Mindaugas Mineikis, Ravi Shankar and Yuan Gao, the postgraduate engineers working on the Morgan LIFECar 2 electric car. I am certain that all of the presentations made here offer opportunities for many firms to grow and employ more people.

Now we all know that there is going to be a huge loss of jobs in the public sector, and the private sector is expected to take up the challenge and create jobs to fill the void.

In the ‘old days’ we would look to the big multi-nationals for job creation.  Margaret Thatcher’s dream back in the day was to lure Nissan, Toyota and Sony to the UK and she was very successful  -  but that was then, and this is now………

My feeling now is that it might be better to make the UK a centre for small, flexible, innovative manufacturers and technical design companies, rather than mass producers and multi-national corporations. This feeling is based on my personal experience of selling a British product to a global market.

Bespoke not mass seems to be the Morgan customers’ wish, the more individual the better. Variety is required not just in colour and in trim and it could equally apply to vehicle types – eg an electric, hybrid, diesel, petrol or bio-fuel car.  This presents a real challenge.  The challenge is to create flexible, efficient multi-skilled factories capable of a multiple variety of products in relatively low volumes. And as the Dyson Report argues, maybe the small and medium sized enterprises are more than capable of taking up this challenge and can also show greater levels of innovation than international corporations. There is also a lot less risk in innovation at lower volumes. 100 defects cost less to put right than 1 million.  

But innovation costs money……which is why it is the huge multi-nationals that tend to have the resources to pay for it. For small firms to take up the challenge to become innovation leaders, incentives are needed. 

In fact they are already here in the UK.  Five of the top ten Universities rated for excellence in research in engineering are in the UK.  Knowledge Transfer Partnership programmes are one way for companies to tap into this bank of knowledge.   Having completed 5 KTP’s at Morgan Motor Company I speak from personal experience.  They have led to a massive up-skilling at my company.  In fact my company is often used as an example of how well KTP’s work in practise and how much money they can generate.

The Morgan AeroMax, SuperSports and the Morgan LIFECar  are good examples of how a small company can take on giant corporations with class leading products. 

Incidentally in the light of recent decisions to cap student immigration, I have to offer a note of warning.  Our KTP graduates working in the UK universities and with Morgan on the electric Morgan LIFECar 2 are examples of how this policy could be disastrous.   I am proud to say that Ravi Shankar, our electronics postgraduate, is from India, Yuan Gao, our software engineer, is from China and Mindaugas Mineikis, our powertrain postgraduate engineer, is from Lithuania.

The second piece of help offered in the UK is research and development tax credits. Now theoretically this allows a company to claw back the cost of the R&D they have financed.  It is a brilliant scheme. I regularly use it to persuade my shareholders, who are keen on their dividends, that there might be a bigger one in the future if we invest profits in R&D now.  

But I wish someone would tell the Inland Revenue tax collectors that this is what it’s for because the definitions they use for R&D are confusing to say the least.  They make it very difficult for smaller companies to claim.  The Inland Revenue website tells us – “Brown collar” R&D as well as “White collar” R&D are eligible yet ideally it should be “Blue Sky”.   What does this mean?  I quote from a test of qualification that the Inland Revenue offers, “if it is obvious to a Professor how to do something, it is not R&D”. Now Professors are good at a lot of things so I thought this was a pretty good get-out clause for the Inland Revenue.   But this also got me thinking….is the opposite true? “If a Professor can’t do it, does this make it R&D?”  Dancing for instance or not caring for your personal appearance?  Are these R&D?

Seriously though, unlike multi-national drugs giants, who I am sure are very effective at blinding the Revenue with science, smaller companies are not very good at blue sky research. However what they are good at is putting things together in an innovative way and the construction of working proto-types is their bread and butter.  Surely these should be classified as Research and Development?

But enough moaning!

There are also more affordable ways of stimulating innovation and small companies often excel at this. Small companies rely on inspirational and charismatic leaders, people who challenge you to do great things.   There has been much evidence of these people in the presentations you have heard at the Advanced Powertrain Conference today.   I quote from Christopher Logue, the Poet,

“Come to the edge

We might fall

Come to the edge

It’s too high

Come to the edge

And they came

And he pushed

And they flew”….

and fly you must, as you can’t rely on the leaders to be the wings for you.   As a Chinese proverb tells us, “Teachers open the door but you enter yourself”.

There is another inexpensive way of stimulating invention which is often commonly seen in start-ups or small companies. This is an inspirational work environment, a place where anything is possible. In US jargon it is called a “skunkworks”. These are places for trying things out, for training, for making prototypes, for getting your hands dirty, a place where engineers and mechanics rub shoulders with artists (or at least designers) and a place where failure is possible (a bit like the Morgan Motor Company in fact). Often this sort of culture is simply not tolerated in large organisations.

It is interesting to note how many people attribute their success to failure. J.K. Rowling, author of Harry Potter, said after being honoured by Harvard University, “I had failed on an epic scale” (she was in poverty after a broken marriage, living as a single parent).  “Failure meant stripping away the inessential.   I was set free.  Failure gave me the determination to succeed in the one arena I truly belonged – writing and the imagination”.

Failure also forces you to do it better next time - and to listen to advice. The best innovative organisations tolerate failure in order to encourage success.

So in conclusion I hope you can see I am a passionate advocate of innovation in the smaller business and in creating the sort of environments and circumstances where innovation is allowed to flourish. I welcome the Government initiatives such as the Knowledge Transfer Partnerships and R&D Tax Credits to help this cause. I am also passionate about work being fun and being the pursuit of what you love doing, rather than just what you do for financial gain between weekends. Fun is I hope what everyone has whilst working at Morgan cars.  The perfect example of us having fun and working at the same time is the production of our new vehicle, the 2011 Morgan Threewheeler.

Arguably LIFECAR fired the public imagination because of its looks, and I think so does our future Morgan Three Wheeler.  The new Morgan Three Wheeler is the update of an icon with a 2011 Harley Davidson “Screamin’ Eagle” engine and a “state of the art” Mazda 5 speed gearbox, providing performance of 50 miles to the gallon and 0-60 mph in 4.5 seconds. I call it “flying on the ground” but I would also argue that is a relevant example of personal transportation for a simpler lower carbon future.

But let’s be honest the open cockpit, sub 500 kilogram MorganThreewheeler is also free of the constraints of passenger car vehicle legislation because it is classified as a motorbike rather than a passenger car. So it has a sturdy rollcage and seatbelts instead of an electronic airbag system that is speed and weight sensitive and requires at least 25 full deployments in a complete car with driver and passenger dummies fully wired up to show injury levels to ensure consistency. But before you say we have gone all retro, I would confirm that Morgan is 100% behind LIFECar 2 and the team responsible for realising a new concept for range extended electric passenger cars in 2012. I leave you with two quotes that apply equally well to the Morgan Motor Company a year after celebrating its Centenary. “Don’t live in the past, there’s no future in it” and a mission statement that perfectly illustrates the course that the company is now following……. “Back to the Future”, to borrow the title of the most successful film of 1985.