SPECIAL REPORT
Manufacturing in this country is doomed - or is it? SARA McDONNELL looks at the growing support for manufacturing in the UK and talks to companies which have defied the trend of sourcing offshore.
T
he demise of British manufacturing has been a much- publicised phenomenon over the past few decades. Statistics show that manufacturing now consists of around
11% of the countryʼs output (gross value added, or GVA) compared to around 22% in 1990. Conversely and perhaps unsurprisingly, Chinaʼs GVA from manufacturing has risen from 35% to 42% in the same period. The impact on the workforce has been huge; from 1978 to 2008, almost four million UK manufacturing jobs were lost. However bad the above figures may seem, they donʼt actually paint the whole picture. Some may be surprised to learn that the UK is actually the sixth largest manufacturer in the world – only the US, China, Japan, Germany and Italy produce more. Manufacturing in the UK generates around £140 billion per annum in GVA. So while it may seem that manufacturing has all but disappeared from the UKʼs economy, the truth is, itʼs our third largest sector.
In a recent government report*, two reasons were cited regarding the continuing fall in the contribution that manufacturing makes to our economy. The first was the outsourcing of low-value goods to lower wage countries and the second was cited as being technological advances driving down prices in manufacturing.
These reasons, particularly the first, will be familiar to those in the printwear industry, which has seen a huge shift to offshore sourcing of goods; particularly in bulk orders, where economy of scale means itʼs often cheaper to pay someone abroad a lower wage and incur increased freight charges than manufacture locally.
The textiles industry has suffered more acutely than most from this phenomenon. The same government report acknowledges that while high-tech sectors such as aerospace and pharmaceuticals have been relatively immune to offshore sourcing, industries such as textiles, plastics and rubber and metals and machinery have seen production go to so-called emerging markets such as China, India and the Phillippines.
| 40 | December 2012
That said, there are companies that manage to make a profit out of manufacturing clothes in the UK, and the key seems to be the ability to offer something a bit different, be it bespoke designs, fast turnaround on small orders or just a higher quality of service.
These manufacturers, who are boldly weathering the current economic storm, are growing in stature and it seems that support for UK manufacturing is also growing. A recent report compiled by Sir Anthony Bamford of JCB warned: ʻIf our politicians fail to deliver a coherent long-term manufacturing strategy, and quickly, we will fall into an economic abyss from which we may never emerge.ʼ More recently, the manufacturing lobby group EEF produced a report, ʻThe route to growthʼ, which calls on the government to set out a clear strategy in growing the economy. ʻMore companies bringing new products and services to marketʼ is one of its key aims.
Quite how this is done via government policy remains to be seen. But UK businesses have recently been praised by the World Economic Forum for being ʻinnovativeʼ, ʻsophisticatedʼ and ʻhighly adept at harnessing the latest technologies for productivity improvements.ʼ It may well be that this innovation and sophistication is what will ultimately help to make us all less reliant on cheap imported goods and more likely to try and buy British.
Further information n *Manufacturing in the UK: supplementary analysis – a report
produced in December 2010 for the Department for Business Innovation and Skills
http://www.bis.gov.uk/assets/biscore/business-sectors/ docs/m/10-1334-manufacturing-in-the-UK-supplementary- analysis n Report into manufacturing by PriceWaterhouseCoopers
http://www.pwc.co.uk/assets/pdf/ukmanufacturing-300309.pdf
www.printwearandpromotion.co.uk
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