Manufacturing fades under Labour

donaldtramp

http://www.ft.com/cms/s/0/f32a3392-df7a-11de-98ca-00144feab49a.html?nclick_check=1

The importance of manufacturing to the economy declined more rapidly under Labour administrations since 1997 than it did during the Margaret Thatcher era, according to a Financial Times study.
The big winners in the same period were bankers, estate agents and public sector workers, whose sectors’ share of output increased under the Labour governments of Tony Blair, the former prime minister, and Gordon Brown, his successor. The findings about the state of the economy were uncovered during a study of data held by the Office for National Statistics.



Manufacturing accounted for more than 20 per cent of the economy in 1997, when Labour came to power critical of the country having too narrow an industrial base. But by 2007, that share had declined to 12.4 per cent.
...
...The near halving of the importance of manufacturing to the economy over 12 years is in stark contrast to the reduction from 25.8 per cent to 22.5 per cent of output that occurred under the Conservative governments of the now Lady Thatcher.

Yup we've been living in a debt bubble for the last decade, on personal and governmental debt.
Did things really get better or have we just expanded the public sector to take up the slack for our destroyed manufacturing base? I think that'll be the second choice then.
Who needs industry when you can simply borrow money and employ everyone in non jobs in the public sector?
It was always going to end the way it has. It was just a question of how long it took for the bubble to burst.
Question is how on Earth do we re-build our manufacturing base that has been destroyed?

Arcaine

I think this just shows how unbalanced the UK is becoming. I have been reading FT Weekend today and we have one of the lowest manufacturing base's in any developed coutry and now with the loss of Corus and 1700 jobs in Teeside the decline continues. It is very sad, and will leave us all poorer in the long run. The Financial Services industry benefits a reletively small amount of people but very well. With no actual production in the UK, UK profit will dry up, consumerism will suffer and we will see even bigger problems than we do now.

nearlynew

The "miracle economy" of the past decade is being exposed as the sham it was.

You can only become wealthy by producing and saving not borrowing and consuming,

As my young daughter said the other day...... "remember daddy, debt is not wealth"

HAMISH_MCTAVISH

donaldtramp wrote: »

Question is how on Earth do we re-build our manufacturing base that has been destroyed?

We can't, and shouldn't waste time and money trying.

It doesn't matter how cheap houses or other living costs are, British workers cannot compete with Indian or Chinese workers on a dollar a day. And when the price of that labour increases, as it surely will, globalised manufacturers will find new cheap labour markets to operate in. This can go on for at least the next 50-100 years.

Manufacturing is only a small part of the total lifecycle of a product. You have to design it, patent it, test it, package it, market it, ship it, finance and insure it and dispose of it. You also have to perform the same lifecycle for every tool, machine, component, ship, lorry, aircraft, etc used in the first product lifecycle.

Theres plenty of scope for us to specialise in other areas than production. The days of mass manufacturing of consumer goods in this country are dead, and rightly so.

Although we are still a top 6 manufaturer, it's primarily in high technology, high quality and high value things like medical devices, aircraft components, avionics, military vehicles.... even F1 cars, where British engineering leads the world.

kabayiri

donaldtramp wrote: »

Question is how on Earth do we re-build our manufacturing base that has been destroyed?

Before you even attempt to answer that question, there is a preceding question :-

Do we need a manufacturing facility in the UK?

You will find that there is a modern age thinking out there that would say we do not need it.

I think this is a short term, shallow, and ultimately deluded viewpoint.

When other countries have a monopoly of supply, they can slowly enforce price rises upon you, and you just have to suck it up.

I have seen state of the art manufacturing facilities in the UK which are highly efficient, and would challenge anything anywhere in the world. Sadly, they are expensive to construct and the financial return is slow and steady, hardly exciting.

Our favourite people at the moment, the financiers and bankers, would rather chase the faster returns available from overseas investment. They do not need to consider the long term consequences, because they will be just fine.

nearlynew

It's OK saying we can do all the technical stuff and they can do the manufacturing.

But what happens when they start doing the technical stuff as well?

Borrowing and consuming is not the path to wealth creation.
Producing and saving is.

Debt is not wealth.

Never has been, never will be.

Arcaine

HAMISH_MCTAVISH wrote: »

We can't, and shouldn't waste time and money trying.

It doesn't matter how cheap houses or other living costs are, British workers cannot compete with Indian or Chinese workers on a dollar a day. And when the price of that labour increases, as it surely will, globalised manufacturers will find new cheap labour markets to operate in. This can go on for at least the next 50-100 years.

Manufacturing is only a small part of the total lifecycle of a product. You have to design it, patent it, test it, package it, market it, ship it, finance and insure it and dispose of it. You also have to perform the same lifecycle for every tool, machine, component, ship, lorry, aircraft, etc used in the first product lifecycle.

Theres plenty of scope for us to specialise in other areas than production. The days of mass manufacturing of consumer goods in this country are dead, and rightly so.

Although we are still a top 6 manufaturer, it's primarily in high technology, high quality and high value things like medical devices, aircraft components, avionics, military vehicles.... even F1 cars, where British engineering leads the world.

You are right, we need to be attracting and developing that type of manufacturing in the UK. I think the Government should be encouraging research into new technologies, especially into sustainable energy sources/methods, which are highly exportable. Without major protectionist policies we are never going to see the vast industrial/manufacturing we have done in the past. I work for a small engineering company and we are still exporting even to the Far East, quality of the local product is just not acceptable, (and the decline in sterling has done us some favours too).

kabayiri

HAMISH_MCTAVISH wrote: »

It doesn't matter how cheap houses or other living costs are, British workers cannot compete with Indian or Chinese workers on a dollar a day. And when the price of that labour increases, as it surely will, globalised manufacturers will find new cheap labour markets to operate in. This can go on for at least the next 50-100 years.

This sounds easy, but it's not.

Over a decade interval, I had to price up Indian IT resource. I wasn't offered the option of using an alternative.

Over that period, the daily rate trebled. I bet most here would be shocked if they knew what the final daily rate was. The suppliers knew they could charge these rates, hence they did.

Can you imagine if we tried to move large blocks of manufacturing work out of China, to say Africa or South America?

Would the Chinese :-
a) accept this as just 'one of those things' in a global economy, or
b) fight tooth and nail to retain those facilities, perhaps even reminding us about the 1 trillion dollars they have invested in Europe....

StevieJ

donaldtramp wrote: »

Question is how on Earth do we re-build our manufacturing base that has been destroyed?

Wow we must have a big economy because the manufacturing bit is still the 6th largest in the world

StevieJ

Arcaine wrote: »

I think this just shows how unbalanced the UK is becoming. I have been reading FT Weekend today and we have one of the lowest manufacturing base's in any developed coutry and now with the loss of Corus and 1700 jobs in Teeside the decline continues. It is very sad, and will leave us all poorer in the long run. The Financial Services industry benefits a reletively small amount of people but very well. With no actual production in the UK, UK profit will dry up, consumerism will suffer and we will see even bigger problems than we do now.

That statement doesn't seem to tie in with the facts

http://investing.curiouscatblog.net/2009/10/13/data-on-the-largest-manufacturing-countries-in-2008/

Arcaine

Sorry should of explained my source a little better. The FT today states it estimates that manufacturing is 11% of GDP and has fallen from 20% in the last 2 decades, it states that no successful developed country has a ratio of GDP to manufacturing below 15%. I cannot really comment on the figures you have put up as they are in dollars and I dont know what exchange rates they are using, but I am sure we still manufacture a lot in monetary terms.

And also are these actual numbers or are they inflation adjusted?