Dyson cleans up

There are few businessmen who raise the passions of the British people quite like James Dyson.

Thousands of customers swear by his iconic colourful vacuum cleaners; to them Dyson is the quintessential British inventor-cum-businessman, the eccentric who has taken on the industry giants and won.

To others - especially the trade unions - he is a traitor, the man who called for a renaissance in British manufacturing and then upped sticks and moved his factory abroad.

It is 2 1/2 years since Dyson said 800 people would lose their jobs after he decided to move production from Wiltshire to Malaysia, and still the debate rages over this man.

Dyson is polite, quietly spoken, a tad posh, and is certainly no loudmouth - hardly the sort of person who typically incites such divided opinions. But the 58-year-old has become a symbol in the increasingly personalised debate over globalisation and outsourcing. So will the real James Dyson step forward?

"I would prefer not to use the word 'hypocrite'," he says of his decision to move his factory to Malaysia. "I prefer to say that I had to do a volte-face."

Volte-face is paying mighty dividends for Dyson, the company and the man. It emerged last year that Dyson and his wife, Deirdre, took 17 million ($45 million) out of the company, a revelation that aroused fierce union criticism.

Then last week we learned why Dyson was able to extract such a large stack of money: the business is booming.

Unaudited figures show that for the last calendar year, Dyson made a 102.9 million profit, up 137 per cent on the previous year.

He is now enjoying considerable success in the United States, having overtaken Hoover as the No 1 vacuum-maker; he commands a 20.7 per cent market share.

Amazing stuff. But this, argues Dyson, probably wouldn't have been possible if the company had kept its vacuum production in Britain. "I have been manufacturing in Britain for the past 36 years," he says. "I invested 40 million into a vacuum cleaner factory and I would love to still be there now. But it simply wasn't possible.

"If anyone else thinks it is, then they are welcome to have a go. But I wasted a lot of money on the factory trying to do it."

Dyson was forced to review the Wiltshire factory after the local council rejected planning permission for an extension. This led him to realise there were at least three other reasons why he should move production to Asia: the factory would be closer to its suppliers, workers' wages were a fraction of those in Britain and, controversially, he believes the workforce is better skilled.

As a result of the move, Dyson's production costs have fallen by about 30 per cent. The company's head office is still in Britain, where it employs 1200 people, including 350 scientists. This model, in which manufacturing is carried out in far-flung places, while the intellectual stuff - the inventing, the designing and the marketing - is done in Britain, now represents the future for much of the country's engineering industry, Dyson argues.

Even so, he is concerned that the odds are still stacked against British manufacturing and engineering companies.

He blames education. "Culturally we are taught that manufacturing is dull, boring and rather exploitative, which is why I studied Latin and Greek instead of science subjects when I was at school.

"I remember being told that if I didn't pass my exams I would end up in a factory which, of course, I have."

He also says the Government is at fault. "Manufacturing has been seen by the Government as something you tax and milk. The attitude has been 'let's make some money out of it'."

The third factor is globalisation. No matter how well we educate our students in engineering and how much the Government lavishes grants on manufacturing firms, it will still be cheaper to assemble in Asia than in Europe.

The politicians have comforted themselves with the belief that while foreign countries can make things more cheaply, they lack the skills and nous to do the really clever stuff British companies are good at, such as research and development.

But Dyson warns against complacency. Although he says he has no intention of shifting his research and development to Asia, he notes: "As a country, we haven't just got to carry on as we are.

"We've got to get a lot better at science and engineering to stay ahead. We have to exploit our nascent British skills of creativity and inventiveness. This is not something the Chinese, and to a certain extent, the Japanese have shown - so far."

Last year, Dyson spent 40 million on R&D in Britain and he plans to increase this to 50 million this year. But what has he got to show for it?

On March 14, he will launch what he claims will be the biggest step change in vacuum design since he introduced the first bagless cleaner, the DC01, in 1993.

It will be called "The Ball", but that's all he is prepared to divulge. The company's scientists have also developed a new electric motor based around microchip technology. The motor is smaller, lighter and can spin more than three times faster than existing units.

The motor will be used in future Dyson products, but the invention has also received envious glances from some unusual quarters.

"We have had a lot of interest from aerospace companies that want high-speed, lightweight and robust motors."

Not every part of Dyson's empire is booming. Data on its two-drum washing machine is noticeably absent.

"Washing machines are doing quite well," says Dyson. But he admits: "Not everyone wants to buy a washing machine that is relatively expensive at the moment."

What should we make of this successful vacuum cleaner manufacturer and moderately successful washing machine maker?

Should we judge Dyson as a brilliant inventor and businessman or as a hardheaded manufacturer who is exploiting the free market to the full? Probably both.

- INDEPENDENT