Continually harping on about the decline in UK manufacturing is a PR exercise to persuade us that the government has the power, or the will, to do something about it; but clearly it doesn’t.
Anthony Bamford, chairman of construction machinery company JCB, has just come up with a nine-point plan to boost the role of manufacturing in Britain, designed to dig us out of this terribly bleak economic pit we find ourselves in. This government commissioned report is just another piece of window dressing by politicians to suggest that they have some control over events and are serious about changing things.
Bamford says his proposed changes are designed to address the deficiencies he recognises between the UK and its much more successful manufacturing neighbour Germany. That country has a better system of training and educating people in technical fields, stronger incentives to invest in machinery and much greater availability of bank finance to help smaller businesses grow. In 2010, Germany was the fourth biggest manufacturer in the world (manufacturing made up about 20 per cent of its economy) and we were tenth (with 12 per cent).
Bamford’s proposed candidate for Manufacturing Tsar, John Rose, the former chief executive of Rolls Royce, is now deputy chairman of merchant bankers Rothschild. There you have it really. He personifies the way that finance matters more to UK plc these days than manufacturing does. Why isn’t he using his considerable manufacturing experience in a manufacturing business rather than a financial one? Bamford says Rose is the ideal candidate for his Tsar, although Rose himself declined to comment. He is famously shy of the press, so I guess he would be a rather quiet Tsar anyway.
Manufacturing is a smaller part of our economy than it once was: the value of UK manufacturing has grown considerably over the years, but it has been somewhat overtaken by other things. Finance and financial services now dominate our economy and harking back to our manufacturing past is a bit of a political smokescreen. The bare facts of the matter are that we can no longer compete on labour-intensive mass production; and the efficient and value-added manufacturing that we do well doesn’t need that many people to do it. It also requires intellectual property and niche expertise that you can’t just conjure up from nowhere.
We can’t turn the clock back or suddenly create a manufacturing base out of nothing. We can incentivise companies to invest in the UK, support the growth of established business and foster innovation. All of these take different lengths of time to have any impact on the economy, or make any material difference for that matter. We have, like all developed countries, already put some effort into all of these things over the years. However, whatever we do, Germany we will never be. We don’t have the history, culture, discipline or established high-value industrial base to exploit that they have and we are too distracted by the City.
The relative decline of British manufacturing has been a natural and gradual thing, over at least five decades. It would take a long time to see it change significantly to power the economy more than it does already. So, this initiative, and the idea of a Tsar, is just window dressing. It takes the place of a serious and prolonged programme, by whoever is in power, to create more value for the UK from manufacturing.
In reality, politicians, who are inevitably short-termists, are mesmerised by the easier money from the financial sector, despite the risks and the relative manufacturing deficit that results. A quiet Tsar may be just the spokesman for UK manufacturing that politicians want.