Despite the perpetual doom and gloom attitude by some in the manufacturing sector, recent figures about the health of UK industry make fairly good reading. According to statistics from the House of Commons Library, manufacturing output rose by 0.1% in August 2014 compared with July 2014, and was 3.9% higher than in August 2013. In Q2 2014 there were 2.6 million jobs in the manufacturing sector – around 8% of all jobs in the UK. This was an increase of 31,000 over the quarter and of 49,000 over the year –on the face of it a decent recovery for manufacturing from the downturn.
However, these figures have to be seen in light of the recession and manufacturing output in the UK remains over 4% lower than pre-downturn levels. They should also be viewed with regard to the global picture that shows manufacturing output per capita in the UK lags behind our fellow developed nations.
Using the most recent figures available, in 2012, out of 237 countries in the world, the UK ranked 7th in terms of manufacturing output at $233 billion – this was slightly above the French but little more than half of German manufacturing output. The UK was also 23rd in terms of manufacturing output per head at $3,700 – this was above the world average $1,300 but below the developed economies of Germany ($7,600), Japan ($7,500), and the US ($6,000)
In terms of manufacturing as a proportion of GNP, the UK has fallen from 15th in the world in 1970 to 114th in the world in 2012. This is because manufacturing has grown in other parts of the world and the UK economy has diversified with the service industries contributing a far larger proportion now than 40 years ago.
Parliament is making all the right noises and has made pledges around boosting the development of 11 key sectors including aerospace, offshore wind and IT, and supporting the development of eight key technologies like satellites, robotics and advanced materials. There have also been commitments to increasing access to finance for businesses, developing the skills of employees in key sectors and using public procurement to create opportunities for UK firms and supply chains.
But we need to see more investment in manufacturing and here are two reasons why. he sector has shown itself to be super adaptable to changing conditions and technologies and despite a dramatic fall in the number of jobs in manufacturing since 1978 output has actually increased in that time. The Government should back a winner – a sector that has grown to become increasingly competitive because it has had to
There is also a drastic need to rebalance te economy and increase exports. The last recession exposed the danger of relying too much on financial services and consumer spending, and many believe that by encouraging more businesses that actually make things the economy will be more robust
Exports are also a concern and have yet to really increase since the Government pledged to double them to £1trillion per year by 2020. More support from Government in this area is sorely needed.
One positive is Vince Cable’s recent proposals to increase the national minimum wage for apprentices, making apprenticeships more financially attractive route for young people. By encouraging young people into the manufacturing sector to earn while they learn, we are investing in the future skills of our workforce and therefore the future health of our economy.