The long haul for Britain's last industrial world leader

Neil Collins says Rolls-Royce's aero-engine factory is now a shockingly rare example of British excellence — and faces an increasing struggle to recruit home-grown talent Mark Benton is quite clear why he followed his father into working for RollsRoyce; after three years toiling away as a roofer, he discovered that 'it's nice and warm in here.... Oops, perhaps I shouldn't have said that.' Benton, 28, born and bred in Derby, rushes to add that he's better paid, has had five different jobs since joining nine years ago, and is literally at the cutting edge of the company's technology, machining turbine blades.

Let's get one thing straight: Rolls-Royce Group plc doesn't make motor cars. The famous badge and 'spirit of ecstasy' statuette on your Roller are there under licence and should a jumped-up carmaker decide to put them on some cheap import, it would find rather more than a sense of humour failure from Rolls' Buckingham Gate HQ. When the carmaker last changed hands, Rolls' combative chief executive Sir John Rose extracted £40 million from the buyer, BMW, for the right to use the name.

The badge on the car matters almost more than anything else, but it's doubtful if one air passenger in a hundred notices the badge on the engine that powers his plane, let alone thinks about Mark Benton's turbine blades. As you gaze out across thin air, you'd probably rather not know that these stubby fiveinch-long fingers are operating at extreme stress in a gas stream 500°C above the melting point of the metal from which they are made. Like the aircraft they power, they appear to defy the laws of physics.

Fan (for the intake at the front of the engine) and turbine (for the power plant) blades are at the heart of Rolls-Royce. A modern engine for a big passenger jet costs over $20 million, and contains too much technology for one company to manage alone. All sorts of bits are outsourced, but the blades are not. From the intricate, woodworm-like design of the airflow inside the exotic nickel alloy (to keep the turbine blade cool enough to avoid meltdown) to the perfectly accurate, single-crystal, ceramiccoated surface, it's all owned by Rolls.

Dr Mike Lloyd, lured to Derby in 2002 from Alstom in Paris to run gas turbine operations, shows me round the machine shop, where these precious little sculptures are made. He's almost evangelical in his enthusiasm for flexible working and continuous improvement: if any component starts to deviate from its design during manufacture, the idea is to catch it long before it wanders outside the operating specification.

We're used to today's technological miracle being tomorrow's commonplace, and we're even more used to seeing British companies disappear into foreign ownership or collapse under the pressure of foreign competition. The president of Civil Aerospace for Rolls, a Welshman with the gift of the gab, is Mike Terrett. The only time I reduce him to silence is by reminding him of the tale of the RB211. In 1971, this revolutionary engine bankrupted the company — but the receiver, Rupert Nicholson, was brave enough to keep the programme going, and bullied the government into support.

A third of a century on, the rewards are clear. The RB211, the first aero-engine with three concentric shafts instead of two, became the Trent series which the company builds for big passenger jets today. As any student of thermodynamics could tell you, the theoretical maximum efficiency of a three-shaft gas turbine is greater than that of a two-shaft one. So far, neither of Rolls' competitors, General Electric and Pratt & Whitney, has made the jump, but one day they'll have to — at huge expense.

In short, this is the ultimate long-term business. Rose likes to claim that we'll have to wait at least a decade, and at least one successor, before we learn whether his decisions are right. Since he's already 11 years into the job, that's a little disingenuous, and he must be doing something right. The share price has gone from 75p to 480p since the market low in 2003, and Merrill Lynch analysts now reckon they're worth 565p.

Wide-bodied passenger aircraft are the future, and the Trent looks set to murder the competition on the mid-sized Airbus 350XWB, due in service in 2012. Anyway, say Merrill, the after-market is where the money is made. The engine data centre at Derby, with its wall-sized multi-screen television display, shows the state of the art. Every engine in service is monitored from this mini-Nasa. Anything untoward is analysed long before it becomes critical: if a bird bashes the nacelle which houses the engine (thus potentially disrupting the airflow), an engineer can poke about with a remote television camera and decide whether the plane flies or must wait for a new part.

The enthusiasm here is palpable, but don't get Rose on to the subject of British industry. The bleak truth is that Rolls-Royce is a shockingly rare example of British engineering excellence. There are others — notably in Formula 1 racing — but the list is worryingly short. Rose fears that once the demand for talent shrinks beyond a certain point, it will dry up completely. The brightest students will either avoid the hard graft needed to succeed in what they see as a dying industry, or go where the jobs are — to California to design chips, or to the City to design derivatives. It would be helpful to our future prosperity to have more than one world-class industry.

Rolls is digging further into universities to attract talent, offering development deals in which postgraduates are given specific projects of direct relevance. Increasingly, though, the net has to be spread abroad. Rolls is still Derby's largest employer after the NHS, and there is no suggestion of leaving, but this company must go where technology leads, whether to the US or China.

Aero-engines are an unusual business, in which only three makers really count. Pratt & Whitney has been cutting back on development — great for profits, but long-term suicide. General Electric is a formidable market leader, but Merrill reckons that Rolls will be pressing it hard. It's surely impossible that anything will displace the jet plane in the next century, while the cost of entry for a new competitor would be tens of billions. The next generation of engines will need to be as quiet as a motor car, to stretch every litre of fuel and to emit less greenhouse gases at higher operating temperatures. Rolls says it can do all three.

What can go wrong? Well, just about everything. The shares are now priced for perfection, and technological advances are always risky. The RB211 was designed with carbon-composite fan blades which saved weight — but disintegrated when struck by a bird. Thirty years on, the blades are titanium, things of stunning beauty with a miraculous interior lattice which makes them even lighter than those ill-starred carboncomposites.

There are only two plane-makers that matter, Airbus and Boeing, and Airbus is staggering from one crisis to the next. In the corner of Rolls' final assembly workshop stand half a dozen massive engines for the A380 superjumbo. Asked who's paying for the delay, Mike Terrett smiles thinly and explains that Rolls must support its customers. The A350XWB is a better prospect, but there's the little matter of €10 billion to be found to develop it.

There's no danger of Rolls going out of business, although the drive for ever greater efficiency will severely limit new job opportunities for the likes of Mark Benton. There are quite a few third-generation employees in Derby, so would he urge his son (or daughter) to join up? `I'm not married yet, but I don't see why not,' he replies. That's the spirit, if not of ecstasy, at least of the long view.

Neil Collins is a columnist for the London Evening Standard.