Uncertainty over the UK's position in Europe is being used against companies in this country by its competitors, a business leader has warned.
Nigel Stein, chief executive of engineering giant GKN, spoke of the importance of the European Union to British industry.
He told the national conference of the EEF manufacturers organisation: "The prospect of the UK talking itself into an exit would be deeply harmful to our industry.
"Much of the output from our car plants goes to the EU. Competition for investment is intense.
"Uncertainty over the UK's position in Europe is being used against us by our competitors.
"If we don't like some aspects of the EU, let us try to change them from within - and not in a British, gold-plated way.
"Make Europe work for us - don't walk away from it."
Mr Stein said an independent Scotland would not make any difference to GKN, although he warned that any uncertainty was bad for businesses.
"Uncertainty is the enemy of investment."
Mr Stein told the London conference that the Government was not helping industry by constantly bringing out new policies and reports, which "diverted" resources.
"Sometimes the best policy is not to take any action. As Ronald Reagan used to say - don't do something, just stand there."
EEF chief executive Terry Scuoler said Britain must continue to play a key role in Europe.
Around 85% of EEF members strongly supported continued membership of the EU.
He said: "There is a compelling need for reform, but it must be done from within the EU."
Mr Scuoler said he hoped there would be a more "intelligent and informed" debate in the run up to May's European elections.
He added that manufacturers were predicting 3% growth this year, but he urged the Government to do more to support the sector.
"I hope the Chancellor will use the Budget to reduce the unacceptable costs faced by business as a result of green levies," he said.
Business Secretary Vince Cable agreed with Mr Stein's comments on Europe, which he described as "very helpful".
Addressing the EEF conference, the minister said the UK was now on the path to economic recovery, which he believed would be led by trade and exports.
He said: "It is important we don't create a new level of uncertainty over membership of the EU. That would be like a hole in the head."
Mr Cable told delegates that manufacturing had declined too much in the UK, adding that the shortage of skilled workers was getting worse, while this country had the worst record in Europe at recruiting women into the profession.
Former engineers were now driving taxis, but the country needed hundreds of thousands of qualified engineers in the future.
Some might come from overseas, but the minister told delegates they had heard the "noise" generated by the immigration debate.
Mr Cable drew laughter when he said graduate teachers knew about passing exams, or how to apply for university, but knew "absolutely nothing" about the world of work.