Is British Manufacturing On The Up Or In Decline?

Contrary to what you may have read, the performance of the British manufacturing industry is stable and strong. Currently the 11th largest in the world, British manufacturing earns 11% gross added value (GVA), with 54% of all exports stemming from the industry’s work.

Despite positive results, however, it is an unavoidable fact that in 2006 the British manufacturing was the world’s 6th most profitable. It’s clear therefore that a decline has taken place, but why? 

How severe is UK manufacturing’s regression?

It’s 1970, and a booming UK manufacturing industry boasts 25% of the UK’s GVA. Today this figure has dropped more than half. Just because some numbers have fallen, it doesn’t mean that none have risen. Figures demonstrating that UK manufacturing’s throughput has increased 1.4% since 1948 paint a distinctly more colourful picture. It’s felt by Joe Grice, Chief Economist at the Office for National Statistics, that increases such as these stem from numerous factors including

  • A more skilled workforce
  • The progression of IT
  • Centralised global networks
  • Increased production of high-quality goods
  • Greater research and development investment

There are some refreshing stats embedded within UK manufacturing’s state of employment. A rising 2.6 million people are currently employed, and increased pay levels, 13% higher than the economies average (Engineers' Employers Federation), are widespread.

The automotive industry has always been a strong suit for British manufacturing and continues to be one of the industry’s more notable powers, with 7% growth in the first six months of 2014. 15% of car buyers are also choosing UK vehicles, according to the Society of Motoring Manufacturers (SMMT).

This all looks very positive, but if the industry is performing well then why have we fallen in the global rankings? The answer lies to a certain extent in the recession, alongside that a number of services that formerly fell into UK manufacturing have now been allocated to other areas of the economy, such as the construction trade.

 What’s next for British manufacturing?

In order to climb back up the global manufacturing rankings, the UK must reduce the payment deficit that has formed from the industry importing more than exporting. A rebalanced deficit can strengthen the current state of British manufacturing, but how do we achieve this?

Worldwide manufacturing is seeing change. Services, in particular, are proving hugely popular, with additional offerings to base products. Customisable goods are also successful within niche fields thanks to low-level competition. It’s becoming more widespread for design and production to travel through multiple countries, lessening an individual countries impact on a final product.

Providing the UK industry can remain aligned with modern trends, it is well equipped to handle changes in its environment. Visible strengths in relation to innovation, workforce and research show that the UK are in a position to move with the latest developments, and behave powerfully in doing so. Countries that have experienced rapid growth such as China are now set to see far slower progression, as economic expansion has caught up with manufacturing rates. Factors such as the rise in local wage costs demonstrate this, which makes for good news in the eyes of developed industries such as the UK’s.

Collectively, if UK manufacturing can continue to create news business models that implement knowledge from research and development, design and production, and maintenance and repair, then the industry can together improve its profitability. These changes will not be immediate, but if the UK wishes to match the speed of the world’s development, it must make inroads in moving forward. 

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