Member Article

Manufacturing is not dead

It’s manufacturing focus week on Bdaily, and we’re looking at the debate around the UK sector. Here, Robert Bowyer of Venn Group tells us why he thinks manufacturing is not dead.

In March 2013 it was reported that the UK’s Purchasing Manufacturer Index had unexpectedly shrunk to its lowest level since October 2012. And after dropping from 50.8 to 47.9, the UK’s manufacturing sector is now considered to be contracting. These statistics may sound rather grim, but UK manufacturing is far from dead. In fact, the industry accounts for around ten per cent of the country’s economy.

Reading the press, it would be easy to assume that manufacturing is in terminal decline. Earlier this year, Honda announced 800 job losses at its Swindon plant. And Ford is to close manufacturing sites in Southampton and Dagenham with the loss of 1,400 jobs – marking the end a century of the company’s vehicle production in the UK. But these reports simply signify a shift away from London and the South. Despite a blip in output, manufacturing in the UK is very much alive, particularly in the Midlands and North.

According to the latest edition of the Venn Index – our quarterly report on employment levels across the UK – vacancy levels within the industry are on the up. And this is having a positive effect on other sectors such as service and distribution.

Britain exported more cars last year than ever before, underlining the strides made by the automotive sector after being close to written off as a failed industry a decade ago. The country’s eight main car plants produced 1.2 million cars for sale overseas in 2012, up 7.8 per cent on 2011.

In this year’s Budget, George Osborne praised the North East, North West and Yorkshire for successfully creating private sector jobs. He also endorsed a single competitive pot of funding for local enterprise, and highlighted the fact that - for the first time in 40 years - Britain manufactures more cars for export than it imports.

The facts are hard to ignore. In the West Midlands, Jaguar Land Rover has scaled up investment plans for its new UK engine manufacturing centre and now expects to create 1,400 jobs, almost double the number previously planned. The company said it would invest more than £500m in the centre near Wolverhampton over the next two years, compared with initial plans set out in 2011 for £355m investment and 750 jobs.

Meanwhile, in the North East, Nissan’s factory in Sunderland – the largest car plant in Britain – increased the numbers of vehicles rolling off its lines by 6.3 per cent last year to 510,000.

Notwithstanding the automotive industry, FMCG production in the north is also strong – and more resilient to fluctuations in global spending patterns. The North East, for example, is home to factories for everyday brands such as Tetley Tea (the largest tea bag factory in the world), Nestle, Procter & Gamble and Schweppes to name but a few. And cumulative profit on such products can be substantial.

On the whole, the economy is moving away from an over-reliance on financial services and the South East of England – and manufacturing is at the heart of this shift. With Government support, improved infrastructure, and healthy overseas markets, there is no reason why manufacturing won’t continue to thrive.

This was posted in Bdaily's Members' News section by Venn Group .