^{(page 53 note 2)} Previous studies of the machine tool industry include: M. E. Beesley and G. W. Troup in chapter IX of The Structure of British Industry (ed. D. Burn, Cambridge, 1958); N. Rosenberg, Technological change in the machine tool industry 1840-1910, Journal of Economic History. 1963; A. Burchardt, The machine tool industry The Trade Union Register, 1973; R. Floud, The British Machine Tool Industry 1850-1914 (CUP, London, 1976); C. Saunders, Engineering in Britain, West Germany and France: Some Statistical Comparisons (Sussex European Research Centre, 1978); H. Miller, Tools that Built a Business, Hutchinson Bennett, London, 1972. Official reports which have expressed concern with this industry include that of the Balfour Committee on Industry and Trade, 1928; the Anglo-American Council on Productivity, 1953; the Mitchell Committee 1960; the Ministry of Technology Report of the Working Party on the Problems Arising from the Cyclical Pattern of Machine Tool Orders, 1966; the Way Committee, 1970; and various more recent NEDO reports. A total of ten government reports on the industry were issued in 1958-73 (see A. Burchardt, op. cit. p. 210).

^{(page 55 note 1)} We used values compiled by the trade association in preference to those shown in the British and German Censuses in response to suggestions from the industry that the definitions adopted in the Censuses were too wide.

^{(page 55 note 2)} I. B. Kravis, Z. Kenessey, A. Heston, R. Summers, A System of International Comparisons of Gross Product and Purchasing Power (John Hopkins University Press, Baltimore, 1975).

^{(page 55 note 3)} The median plant is here defined so that half the employees in the industry are in plants greater than it, and half in plants that are smaller; the quartiles are defined correspondingly.

^{(page 55 note 4)} Engineering Employers' Federation, A Pilot Study of Performance and Productivity in the UK Engineering Industry (London, 1979), p. 85.

^{(page 56 note 1)} They relate to companies without consolidating subsidiaries, and exclude Handwerk from their coverage; the figures are taken from the Monopolkommission's report for 1973-75, p. 584.

^{(page 56 note 2)} The comments that follow are necessarily very general and should be taken as no more than an introduction to the central issues involved. As machine tools are very diverse, the optimal plant-size will obviously be very different for those products which justify flow-production methods than for those produced in small batches.

^{(page 57 note 1)} Board of Trade. The Machine Tool Industry. A Report by the Sub-Committee of the Machine Tool Advisory Council appointed to consider Professor Melman's Report to the European Productivity Agency (London, HMSO, 1960); see especially pp. 23 and 33.

^{(page 57 note 2)} C. Saunders, Engineering in Britain, West Germany and France: Some Statistical Comparisons (Sussex European Research Centre, 1978), pp. 84, 97.

^{(page 57 note 3)} Department of Trade and Industry. The Machine Tool Industry. Report of the Machine Tool Expert Committee under the Chairmanship of Sir Richard Way (London, HMSO, 1970) pp. 6, 19.

^{(page 58 note 1)} The Economist, 22 March 1975 (p. 95).

^{(page 58 note 2)} NEDC, Industrial Strategy: Machine Tools (NEDO, 1976), p.2.

^{(page 59 note 1)} Ministry of Technology, Report of the Working Party on the Problems Arising from the Cyclical Pattern of Machine Tool Orders (HMSO, London, 1966).

^{(page 59 note 2)} We fitted a constant proportional trend to gross output (Germany), sales (Britain) and value of shipments (America), the latter two deflated by the appropriate wholesale price series, and took the relative deviations from it (using the equation log y=a+bt+e, and calculated the standard deviation of e). The resulting measures of residual variability were 10.5 per cent in Germany, 10.2 per cent in Britain and 23.5 per cent in America. For the volume of orders in 1958-76, the residual variability was 28 per cent in Britain, and 40 per cent in America.

^{(page 59 note 3)} The variability of the output of the engineering and allied industries, calculated as in the preceding footnote, was 2.8 per cent in Britain, 7.2 per cent in Germany and 8.9 per cent in America.

^{(page 59 note 4)} For example, the Machine Tool EDC noted in its Progress Report 1979 (p. 7) that despite the continuing recession ‘parts of the industry are now experiencing a shortage of skilled labour which is constraining output for some firms’; and a large engineering company at about the same time noted ‘Progress was however again impeded by shortages of qualified engineers and technical staff. The imbalance of supply and demand for such groups of skilled people appears to have become, if anything, more serious over the last year’. (Annual Report for 1978 of Brown Boveri Kent Ltd.)

^{(page 59 note 5)} This criticism was voiced by the chairman of Rolls Royce, Sir Kenneth Keith, in addressing the Machine Tool Trades Association (Financial Times, 16 November 1978).

^{(page 60 note 1)} Cf. G. Williams, Apprenticeship in Europe. The Lesson for Britain (London, Chapman and Hall, 1963), p. 178.

^{(page 60 note 2)} Ibid.

^{(page 60 note 3)} D. E. Wheatley, Apprenticeships in the United Kingdom (Commission for the European Communities, Brussels, 1976), p. 47.

^{(page 60 note 4)} For example in 1975 a discussion document on Vocational Preparation for Young People was issued by the Training Services Agency; in 1976 a consultative document on Training for Vital Skills was issued by the Manpower Services Commission; the Secretary of State for Education and Science called a conference in March 1976 on 16-19: Getting Ready for Work; Young People and Work was published by the Manpower Services Commission in 1978; Education and Training for 16-18 year olds: a Consultative Paper was presented in February 1979 by the Secretaries of State for Education and Science, for Employment and for Wales; A Better Start in Working Life was presented in April 1979 by the Secretaries of State for Employment, for Education and Science, for Industry, for Scotland and for Wales.

^{(page 60 note 5)} Wheatley, op. cit., p. 19.

^{(page 61 note 1)} Review of Craft Apprenticeship in Engineering (Information Paper 49, EITB, 1978). These ‘IP 49’ proposals aroused much debate in the industry.

^{(page 61 note 2)} The Finniston Committee of Enquiry into the Engineering Profession has proposed the extension of the British university degree in engineering to include greater practical training. At the time of writing the recommendations are still under consideration.

^{(page 61 note 3)} S. P. Hutton, P. A. Lawrence and J. H. Smith, The Recruitment, Deployment and Status of the Mechanical Engineer in the German Federal Republic (Mimeo, University of Southampton, 1977) p. 121.

^{(page 61 note 4)} As opposed to specific training valuable only to that particular employer; this distinction has been made most clearly by G. Becker (Human Capital, Cambridge University Press, 2nd ed., 1975).

^{(page 62 note 1)} See Beesley and Troup, op. cit., p. 362.

^{(page 62 note 2)} Financial Times, 28 March 1979. Results are not yet available of an assessment by the Department of Industry of this subsidy.

^{(page 62 note 3)} The estimates for the earlier years of this period are due to A. Burchardt, op. cit. A small fraction of the gross sum (perhaps a tenth) represents loans which were eventually repaid to the government. Some might take the view that the government's support for Alfred Herbert was in the nature of an ‘investment’; but since most of it seems to have been lost, or used in closing down sections of that concern, it seems not inappropriate to treat it as part of the taxpayer's burden.