A manufactured crisis?

The state of manufacturing in the UK is a bit of a bugbear of mine.
This is the sector which was, of course, decimated in the 1980s when that awful Maggie Thatcher went round Britain with a wrecking ball and took down every factory she saw – especially those in places like the North East and the West Midlands.
Which means that, today, Britain doesn’t make anything anymore and we’re all doomed (again).
Except she didn’t, and we’re not.
Putting political rhetoric to one side, a close examination of the history of manufacturing would tell you four things.
1) That traditional manufacturing’s decline began to take hold in the 1960s. It happened because our own manufacturers were, quite simply, under-invested, inefficient, making many poor quality products compared to global rivals, and focusing too heavily on disappearing markets.
2) That manufacturing when Margaret Thatcher came to power represented 25.8 per cent of the UK’s industrial output and had fallen to 22.5 per cent by the time she left Downing Street.
3) That manufacturing’s share of UK GDP began to fall noticeably from the late 1990s onwards.
4) That this fall was in part relative – in other words, its share of GDP became smaller partly because other industries (notably financial services) grew faster.
It’s hard to get that point across because politicians with axes to grind (if they can find a factory to grind them) peddle the myth that the policies of different governments led to the UK’s industrial ruin - which is tosh. For starters, Government doesn’t own any industry it could ruin (it did that in the 1960s and 70s).
Where government unquestionably has contributed to industrial decline is in the recording of it. Whatever you think of the East Midlands Development Agency (RIP), one of the most valuable things it did was record the size and shape of the regional economy.
Its last set of numbers would tell you, for example, that ‘decimated’ manufacturing actually makes up nearly a quarter of East Midlands output. Not bad for a dead industry, eh?
Since emda was consigned to a filing cabinet (the one marked ‘rename this policy and use it again in 10 years’), industrial statistics have been compiled by the Office for National Statistics.
Now, the ONS is a much-maligned body which has been used and abused by politicians for years. It is protected from interference now and churns out useful data by the bucketload.
On the downside, its website is almost impossible for members of the public to navigate and its figures about manufacturing record not GDP but GVA – a similar but subtly different measure of the value of what we all produce. So you’ll get different and slightly confusing analyses of where manufacturing’s at.
To cut to the chase, despite the myth-mongering, manufacturing is worth substantially more to the UK economy now than it was in the past. We’re a world leader in areas like aerospace, automotive, transport, computer processing, pharmaceuticals, biotechnology, nanotechnology etc.
Locally, we have substantial supply chains and multi-million university R&D programmes feeding into manufacturing giants like Rolls-Royce, Bombardier, Toyota, Airbus, Boeing. Alliance Boots and Imperial Tobacco between them employ thousands making things in Nottingham alone.
This is, in other words, something worth pondering over next time you’re on a train. Like, for example, the channel tunnel loco. Its gear sets are fettled right here in Nottingham by ZF Services UK.
We (and especially politicians) continually make the mistake of believing that successful manufacturing must be big, easy to see and employ hundreds if not thousands. Try telling that to Promethean Particles in Nottingham. They are a world-leader in the manufacture of nanoparticles.
There is nothing exceptional about the relative decline of manufacturing in the UK – barring the likes of Japan and Germany, it’s happened in almost all big economies. In our case it may have been accelerated not so much by government policy as our own preference for spending our money rather than saving it, and for our reluctance to do low paid jobs.
This means much of our economy is focused on sating consumer demand and less money is sloshing round in savings accounts waiting to be recirculated as business investment.
Manufacturing now takes a smaller share of GDP in many developed countries because they’ve followed a similar path. And increasing consumer spending is often a sign of a fundamentally wealthy economy which wants to indulge itself. Is that wrong?
But manufacturing isn’t dead. It wasn’t decimated in the 1980s. We still design and manufacture some of the best things in the world. And even in some parts of volume production we can still compete with the best.
Manufacturing is not what it was, we ought to do more of it. A plant which churned out accurate memories of our industrial past might be a start.