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BRITISH MANUFACTURING: DOING QUITE WELL

By Pete Moore On April 19th, 2012

It’s long been the lament that “we don’t make anything anymore”. Well we do, as this chart shows:

It plots the value of Britain’s manufacturing output from the end of WW2 to the present. Tim Worstall has set up camp at The Telegraph (it’s about time it featured some economic sense) and, as he explains, the value of manufacturing output has well more than doubled since 1945 (or just look at the line and the numbers). He also explains a few more facts of manufacturing life over there. Before anyone again is tempted to lament “the decline of British manufacturing”, I do hope they give the piece a read. Go on, go shoo.

50 Responses to “BRITISH MANUFACTURING: DOING QUITE WELL”

  1. I don’t remember seeing a single British manufactured product intended for a retail consumber in the past twenty years or more here.

    Apart from Scotch, and biscuits from Scotland, etc.

    I’ve seen high value things such as Rolls Royce jet engines, but there are very few British products to be seen.

  2. Phantom –

    “I’ve seen high value things such as Rolls Royce jet engines …”

    You didn’t read the article, did you?

  3. I did.

    Why do you ask?

  4. Because the piece explains why you don’t see British-made whippet flanges anymore, but you do see Rolls Royce engines hanging off your aircraft wing. It’s the “we moved up the value chain” thing. We make higher value goods while the Chinese bash out the whippet flanges.

  5. Well the Germans are if anything higher on the value chain than Britain is and you see consumer products from them all the time.

    They sell things like $100 pairs of house slippers and expensive kitchen knives. People buy them regardless of price because they are well made. The workers in those plants make decent money.

    It’s not either/or. There’s no reason that you can’t be at multiple places on the value chain.

    I own stuff from France ( incl the Mephisto shoes I am wearing now ), Italy, Germany but not from the UK. Because I never see anything from there.

  6. There are two main reasons for the perception of the decline of British Manufacturing. The first is one Phantom has aluded to. There are no longer a large section of British “winners”. Yes Britain has Rolls Royce (so does Germany by the way as nearly 10% of Rolls Royce work is done by RRD). The bulk of the British car industry is owned by foreign companies (mostly German but also American and Indian). It lacks a visible Aircraft industry with the bulk of UK aerospace being either in systems (BAE), engines (Rolls Royce) or parts manufacturing (Bombarider and Smiths). Compare this to the US, which has Boeing and Lockheed Martin, Germany and France, which have Airbus, Canada, which has Bombardier and Brazil, which has Embraer. Britain lacks prestige industry in the way that other countries have, with the notable exception of pharmaceutical manufacturing where GlaxoSmithKline and AstraZeneca are among global leaders.

    The second reason, and this is a similar reason why there is a perception of the decline in the United States, is the decline of the manufacturing labour market. If you look at France and Germany, for example, the % of their GDP derived from manufacturing is actually pretty similar to the % of their workforce who work in manufacturing. In the UK and the United States it is somewhat lower.

  7. Seamus –

    – “The bulk of the British car industry is owned by foreign companies (mostly German but also American and Indian).”

    Meaning, the British car industry has attracted enormous inward investment and the jobs are still here.

    – “Germany and France, which have Airbus”

    We don’t have some of that? BAE owns a decent chunk of it and makes Airbus wings.

  8. When I was a kid, it was very common to see ” Sheffield Steel ” cutlery in the shops. It was well thought of. It was a brand, a selling point.

    You never see it anymore. What the hell happened?

    This is the kind of small ( or not so small ) industry that should still exist.

    I’m not here calling for any government program or intervention either and am not saying that there should have been such in the past.

    But why did this business go away?

    People don’t buy everyday silverware every day, and I reject that price would have been a major reason for people not buying Sheffield steel anymore.

  9. Phantom –

    Well it depends on what you want. If you want a $100 pair of slippers then you might have to go German in that case. If you want, say, decent outdoor clothing, British is best for example.

  10. But that was the point I was making Pete. British Manufacturing is there but the prestige industries aren’t. The UK also produces Bombardier wings, fuselages, engines etc but because they actual aircraft are assembled in Canada the Canucks get the international prestige for it. Because final assembly of Airbus aircraft takes place primarily in France and Germany, and a small number in Spain, it is perceived as such as a French and German aircraft.

    Also BAE sold its share in Airbus in 2006.

  11. “But why did this business go away?”

    Well firstly a large section of the British steel industry collapsed. Secondly the majority of it which was left over was bought over by first Dutch and now Indian companies. So the product is still there its just probably called Bangalore Steel or something like it now.

  12. I’ve never seen any British made apparel in the past decades.

    All we see here is China / other Asian / Latin America , and some French and Italian if you are going top shelf.

  13. Seamus

    But even if the steelworks has a different owner, there is no reason why the UK could not have continued to make cutlery. They had a brand there, and people would have paid for it going forward.

  14. Phantom –

    Some of it remains in various forms. ‘Forgemasters’ remains one of the pre-eminent steelworks, for example. The thing is, socialism happened to much of British industry in the post-war years, it became unproductive, sclerotic and priced itself out of markets.

  15. In this small example, I’m not speaking of any steelworks. I’m speaking of the manufacture of things from steel. Its not the same.

    This may have been one of the many industries that were killed by unions that plant owners concluded that they didn’t want to do business with anymore, that the process was just too painful they’d just rather close the plant.

  16. “But even if the steelworks has a different owner, there is no reason why the UK could not have continued to make cutlery. They had a brand there, and people would have paid for it going forward.”

    It wasn’t a small company though. All British steel and all British steel products were produced by largely speaking one company, the imaginatively titled British Steel. When the Tories privatised it in the late 80s they did so as one company (because it would get them more money) instead of breaking it up into separate companies which could have continued traditions. As such all of the industry, trademarks and brands continued under one company that is no longer in UK hands.

    For what it is worth around 10% of British industry is still in the manufacturing of metals and basic metal products.

  17. Well someone should revive Sheffield Steel cutlery because there is a memory of that name. If properly promoted, you’d make money on it.

  18. There could be a question mark of the legality. If Sheffield Steel is a brand then the brand is probably still owned by the companies that bought British Steel.

  19. Yea, but if they’re not doing anything with it they should be willing to sell it.

  20. I actually just did a quick search. Apparently it still does exist:

    http://www.sheffield-cutlery.com/

  21. Wow

    Who knew?

  22. Britain needs a Steve Bridges now more than ever:

    Here’s the deal … We have the most productive workers in the world. All of the little tags that say ‘Made in China’? We make those here!

  23. BAE sold its Airbus shareholding in 2006.

  24. From the article in The Daily Telegraph:

    What’s really happening to manufacturing is what happened to agriculture over the past couple of centuries. Time was when we needed 80% of the people standing in fields to feed the 20% who did not. Now we only need 2% in the mud to feed the 98% who aren’t.

    Mr Worstall fails to notice that the UK has to import food to feed about 1/3 of its current population. He also fails to mention that the UK runs a chronic balance of trade deficit, especially in manufactures i.e. the UK owes the rest of the world more each month.

  25. Largely speaking because food prices, contrary to popular opinion, have significantly decreased in the last few decades. At the same time the cost to running a farm in the UK, due to increases in both land price, the cost of labour and associated costs have meant that British farms struggle to compete with cheaper, foreign food prices.

  26. What about Armitage Shanks !

  27. Armitage Shanks indeed.

    Yep, there’s no doubt about it. When you have to use the bog, there’s no bog like the Great British bog. Let’s be honest, Johnny Foreigner just can’t compete on that one.

    Makes you proud.

  28. Seamus – Britain cannot feed 65 million people. The productive capacity is for about 35 – 40 million people so the rest must be imported. But what you wrote isn’t incorrect in terms of costs.

  29. Britain probably could feed 65 million people. In fact it could feed a whole lot more that that. It just wouldn’t be economical because of the costs and lack of innovation in the British farming industry.

  30. Seamus,

    Methinks you are making a very simplistic assumption.

    Lack of innovation? – just how much inovation can you have if you have a very limited space to work in. Much of the UK is either unusable for crops and how innovative can you get with livestock, without bitching from the animal rights folk? and then let’s not forget the need for recreational areas, – and all those scenic delights etc. as enjoyed by the ‘walking’ fraternity.

    And, of course, just how much innovation do the small margins allowed by the supermarkets allow a farmer to make?

    Ask any food retailer about the British shopper, and they will all say – ‘They just want cheap, quality comes low on their list’. An admirable aim maybe, when not carried to extreme.

  31. The principle lack of innovation is because, without being ageist, new farmers are few and far between. The average age of a farmer is about 60. The price of land prices the majority of would be new farmers out of the market. With the same people doing the job the same techniques have a tendency to dominate.

  32. How is there a lack of innovation in British farming?

  33. S

    What should they do that theyre not doing?

    I had always heard that British farners were very productive

  34. Because of the deflationary impact of global free trade British farmers have to sell their goods at lower prices, which means they are getting less money for the same productivity. The only way to increase money is to increase productivity, something that isn’t happening. Significant areas of UK farming are generating no money at all and in many cases are only remaining in operation because of the CAP and other subsidies. Because they aren’t going bust they aren’t developing new ways to make money. And because of the huge increase in the price of land new farmers with new ideas can’t get into the market.

  35. This sounds fluffy.

    Give me a few examples of the new ideas that are being held down by the high price of land.

    I’m not sure that I see that global free trade is necessarily causing great harm to them, not when the EU still restricts some agricultural trade, and when the EU gives fat CAP subsidies to some of them.

  36. You are quite right. we have lost our manufacturing base, and only a resurgence of national pride will allow a re-flowering of the Anglo-Saxon creative genius.
    The curse of the British is not lack of talent, but the lack of marketing that talent over the long term.
    There can be no denying that the British have invented the greatest technological innovations, but we have left it up to you Yanks and Japanese to refine and exploit them.
    Why that is I don’t know, but I suspect it has something to do with our class system and snobbery.
    What can you do, my boy?

  37. Of course the dismal record of the long term delivery of the aforesaid inventions and innovations might have something to do with it.

    It seems that once an indusstry, – in whatever field, – gets well established, then in steps the ‘unions’ to practice their usual blackmail. Whether it be in engineering, mining, transportation, the docks or whatever, there they are with the usual pretences of fairness and the fictious ‘right to work’.

    They – ‘the unions’, are as responsible for the decline in jobs and output as any politician. And all to fight a class war , which had been won several generations ago, and by their clod minded stupid obstinancy to then widen the wealth gap again between rich and poor to levels not seen since the beginning of th eindustrial revolution.

    Is there any other country that has suffered in such fashion? – it isn’t that unions are bad in themselves, it is just our particular ones that are such selfish ingrates.

  38. Agit8ed –

    We haven’t “lost our manufacturing base”, whatever a manufacturing “base” is. I recommend the link in the post.

  39. Pete,
    we have lost our manufacturing base in terms of output ,origin and diversity.
    You and I both know that at one time we produced everything from Sheffield cutlery to tv’s, radios, fridges and washing machines. More seriously we no longer make the heavy stuff like ships, locomotives, buses. Even our big civil engineering companies have gone.
    It is for that reason we are falling behind.

  40. Agit8ed –

    Read the link.

    There are reasons why we no longer some of those things, beside the fact northern communists were crap at making stuff.

    Many countries no longer make alot of what they once made. Even China is now losing manufacturing jobs. Every country has lost and continues to lose manufacturing jobs simply because those jobs are no longer required.

  41. Pete

    The fact that we’ve read the link doesn’t mean that we have to agree with everything that the author says.

    England and Scotland could so easily have kept more of those manufacturing jobs over time. There would have been a decline due to automation and foreign competition, but it could have been a slower one, which would have been so much better for the country and for the local society.

    Many of the guys who lost the blue collar jobs aren’t easily retrained into those who are going to start up the next Glaswegian Facebook.

    I think that the major culprit is the unions, who were so impossible to deal with that at the end of the day, no one wanted to deal with them. They compare very unfavorably to the unions in places like Germany or even France. They betrayed their members much more than Mrs. Thatcher ever did.

  42. Phantom –

    If your point is that some manufacturing jobs have gone, then you don’t disagree with the linked piece. Why some jobs have gone is, in fact, explained in the link. Incidentally, we haven’t lost manufatcuring jobs at any greater rate than any other Western nation. In Britain, the US, France, Germany etc, the rate of decline is broadly the same.

    But to suggest that we no longer have any manufacturing is bollocks.

  43. The ” Manufacturing as percentage of GDP ” shows a forty year span but it just so happens not to include the UK.

    That is sloppy work at best on the part of Mr. Worstall, since his article is largely speaking of the UK.

    If manufacturing as a percentage of the economy has declined at a greater rate in the UK over the past 40 years than in other countries such as Germany, then the article is deceptive.

  44. Phantom –

    Here you go.

    Scroll down a little to the third graph: “Percentage of Employment in Manufacturing”

  45. But that is a different thing than manufacturing as a percentage of GDP

    And re the charts from the article you just sent

    The manufacturing output chart shows from 1970-2010
    a big rise in dollar value of US mfg
    a very flat line in US dollar value of UK mfg ( which appears to be at complete variance with Mr. Worstall’s chart )

    The Bureau of Labor Statistics chart of percentage of employment in manufacturing shows the percentage of the UK labor force in mfg going from about 34% in 1970 to what looks to be about 13% in 2006. That is an astonishing 61% decrease and it looks to be a greater relative decline than than in the other countries – as many have been saying here for years.

  46. A ‘manufacturing base’ is the industrial capacity to provide the goods and infrastructure for the national market i.e. importing only what is not viable and only the amount as earned by exports. Having huge trade deficits is unsustainable.

  47. Allan@Aberdeen –

    About the most expensive and innefficient economies we could have are those where each country makes its own cars, vans, ships, factory equipment, electrical goods, clothes, lights, furniture and everything else.

    We really don’t want that.

  48. Almost noone wants to go to a state of autarchy – where each country makes all its own things. That leads to poverty in a hurry.

    The UK has a long history as a trading nation and it has benefited you greatly.

    But you still could and should be making more tangible things.

  49. Yes, Phantom, we could and should be making more stuff.

    A good start would be for the State to not consume well over 50 per cent of the economic output, confiscate well over 50 per cent of our income, make economic endeavour prohibitively expensive and a regulatory minefield.

    Much of those great industries and ventures which made Britain “the workshop of the world” wouldn’t get started now because they wouldn’t be allowed to get started.

  50. I don’t disagree with much of that, but Germany is also a high tax / high regulation country, and they’re doing relatively fine.

    Lowering tax prudently/ removing perverse incentives caused by tax / slashing government waste / getting rid of unnecessary regulation is a fine idea, though. I am all for it.