Is the UK’s nostalgia for manufacturing misguided?

7th November 2011

But manufacturing makes up less than a quarter of our GDP. Other countries with cheaper labour have proved themselves more adept. So why does it tug on the UK's heart strings? Is this nostalgia for UK's manufacturing base misplaced?


"Ignoring manufacturing and pandering to the City"

The debate was started by the news that the Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) had slumped to 47.4 in October from 50.8 the month before, its lowest since June 2009. In the recent GDP figures, service sector growth, in contrast, was pretty buoyant, but no-one was heartened by that. Wattys123 was typical of the reactions to the news:

"Successive governments have been guilty of ignoring manufacturing and pandering to the city. The real wealth creators have been largely ignored and the city parasites courted. What the country wouldn't give to have the world-class manufacturing of Sweden or Germany? It wasn't so long ago we were making Concorde. It isn't too late, the country can turn it around but at the moment our engineers are leaving the country in droves for Canada and Singapore and being replaced by non-skilled immigrants.  The government needs to act decisively to boost manufacturing before it is too late."


Nostalgia for manufacturing

It should be said that Concord ultimately proved uneconomic, and world-class manufacturing has not helped Japan shrug off deflation, but Mindful Money blogger Kim Stephenson believes that this nostalgia is not entirely misplaced:

"Logically, it probably doesn't make much difference because it is a relatively small part of our economy.  But since when did logic enter into it?  It is symbolic of when the UK had a manufacturing base (we were the leading industrial nation, our industrial revolution came first) we had an Empire with special trade privileges, a "special relationship" with the US etc.  We were ‘somebody'." 

"You've only got to look at the general (unfounded) fear of bankers all going to Switzerland or the off-shoring of call centres to see how easily service industries can go out of the country.  You can't move an industrial plant halfway round the world quite as easily." 

"And if somebody said to a service sector worker – ‘we don't need you any more, what we want is lath operators' – how happy would you be that ‘there is a job for you, it is only necessary to change a bit, what is wrong with you are you a Luddite'?  You might be a bit sentimental about the days when the UK was a centre for service industries before it moved over to manufacturing.  And your MP might be a bit worried at all the journalists, wealth managers, bankers etc. who were going to feel she or he should have protected them from having to retrain as riveters or foundreymen and therefore won't vote for them any more." 


Developing strength from manufacturing

Therefore if nostalgia brings pressure on governments to improve the UK's manufacturing base, then it is no bad thing. After all, developing strength in manufacturing would diversify the economy away from financial services and -perhaps – render it more robust. But how to do it? This article from the Business and Politics think tank has some thoughts.

Author John Willman suggests steps the government might take to boost UK manufacturing:


These suggestions were originally made in a research report to Policy Exchange and, as such, may already have received the attention of the coalition government. Willman also points out that – contrary to popular belief – the UK has historically been good at manufacturing:

"Companies such as JCB, Jaguar LandRover, GSK and Diageo are world leaders in their sectors. Until the financial crisis knocked things sideways, British manufacturers were making more than ever before in the country's history."

The hand-wringing over UK manufacturing may be nostalgic but it is not misplaced. Manufacturing forms half of all British exports, it diversifies the economy and it potentially provides a new source of growth. If nostalgia prompts action, then it is productive.

More from Mindful Money:

UK GDP grows – Pessimism prevails

The Fear Index: Building resilience on the market rollercoaster

Has the market for hedge funds finally turned?

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