UK manufacturing is falling further behind its European and American competitors.
Nick Brayshaw, chairman of the CBI Manufacturing Council, said the country's universities needed to work more closely with the sector to prevent undergraduates being creamed off by accountancy firms.
He said the myth that you could only get rich by working in the service sector needed to be exploded.
And there were would be no place for the so-called "educational rejects" which in the past had been dumped into low skilled manufacturing jobs after leaving school with no qualifications.
Speaking at a senior executive lunch in Birmingham yesterday, Mr Brayshaw said Germany, France and the US had increased their manufacturing output faster than the UK.
"If you look at employment levels in Germany and France they are virtually flat; there has been very little reduction in employment.
"But they have spent on developing their skills and capital investment. These are the countries we have to worry about.
"And we are not catching up. We spent 20 per cent less than France and Germany on capital investment and two thirds less on research and development.
"We are behind and we are getting further behind. Are we responding to the global challenge - not compared to those guys."
China was more of an opportunity than a threat said Mr Brayshaw, but one which the UK was not making the most of.
"Our exports to China are up 30 per cent year on year, but we sell more in absolute terms to Norway.
"We are the great internationalists, but for every unit we export to China, for France it is double and Germany treble."
Mr Brayshaw said more help was needed to assist companies access research and development tax credits, while public procurement could drive innovation in sectors like renewable energy.
"For the vast majority of companies, the R & D tax credit gets put in the too difficult box. It needs to be made easier.
"There are links between the universities, industry and manufacturers in three key areas - defences, aerospace and pharmaceuticals.
"That must be replicated elsewhere."
Other aspects to be addressed include creating a capital tax credit to encourage investment while UK Trade & Investment should aggressively target growing markets for manufacturers in India and China. Meanwhile manufacturers themselves had to do more to recruit the brightest and best.
"The big four accountancy firms will employ 5,000 graduates this year, half from science and technology.
"I think of this as leakage. We have to explain to school kids and graduates that manufacturing is sexy.
"There is huge perception that if you want to be rich be an accountant, but there are more rich people in manufacturing than in most other sectors." ..SUPL:
