More needs to be done to ease the transfer of technology between Britain's universities and businesses, the outgoing deputy chairman of Advantage West Midlands has claimed.
Increased pressure was being placed on small and medium sized firms to develop new products and process which they could not afford to do, said Norman Price,
Mr Price, who steps down after completing six years at the regional development agency, said technology transfer was vital if Midlands industry was to remain competitive.
He added manufacturing had a bright future in the Midlands, provided it worked in niche and high volume areas, while design and innovation companies should attached themselves to the high volume car production schemes of Chinese and Indian companies.
"You cannot sell yesterday's technology forever," said Mr Price. "If you look back at the Industrial Revolution, the Midlands was the first in the field, with iron and coal and steam, and this was used to improve industrial processes as well as products.
"As well as using the latest R&D to improve products, we should look at how it can improve processes, like IT and software."
Mr Price said although the universities were really good at pure research, but there was a greater need for applied research which allowed it to be used in companies. "There used to be a tendency for research to be concentrated in the original equipment manufacturers, whether that has been in the automotive or aerospace industry.
"There has been a tendency to push some of the research down to the suppliers and some of that has been pushed to their suppliers.
"But sometimes the small businesses do not have the time, or the money or the skills to do the research. It is also a big risk for them to devote a lot of time to one project. More needs to be done to fill the gap between pure research and applied research."
Manufacturers need to become more customer focused as well as technologically savvy, he added. "Companies need to be closer to the customer. The closer to the customer you get the more profits there are going to be." This could help firms survive the ongoing competition from cheap labour economies in the future.
"Labour costs should be no problem if it is less than 30 per cent of the value of the product you are producing.
"But you have to make sure you have got the right equipment and technology. You only have to look at the BMW Plant at Hams Hall, that is one of the most efficient engine factories in the world."
The automotive sector was bouncing back from the MG Rover collapse, with many firms picking up work with the overseas firms which have presences in the UK.
But generally, the automotive firms were finding the going tough, said Mr Price. "Nobody is making money in the automotive industry apart from Porsche and BMW. Korea is investing large amounts in research and development, and so is India and China.
"It is not just labour costs, component costs are going to rise and the pressure is not going to get any easier. But there is hope with niche manufacturers and prestige brands. People are always prepared to pay for something different.
"It is nothing to do with engineering, it is about what people are prepared to pay."
Mr Price said Midlands firms could benefit from links with Chinese automakers like SAIC and Nanjing Automobile, while he was hopeful Indian conglomerate Tata would set up a design centre in Coventry.
He said: "The Chinese and the Indians are coming and they are going to be making volume cars; we can do the research and development and the sales and marketing for them. Not all manufacturing is about actually making the product. Out of the 6,000 at Longbridge, less than half were actually transforming items. Everyone is in the service industry; just some of them produce physical items, some do not."
Mr Price is to be succeeded by Richard Hyde, managing director of DIY distributor Brian Hyde.