Member Article

Manufacturing focus should be UK consumed goods

It’s manufacturing focus week on Bdaily, and we’re looking at the debate around the UK sector. Here founder and chairman of Ebac, John Elliott, offers his views on where UK manufacturers need to focus their attention.

When “the powers that be” discuss manufacturing, they talk about woolly, pie-in-the-sky ideas which are never defined. Innovation of high value goods sounds fine as an idea, but we need to be more pragmatic. We need to make things for which there is consistent demand. These are the things we all buy day in and day out.

We used to make these things in the UK but production has moved to emerging markets for lower prices. This appears to save us money until we look at the overall implications. Although we save money buying a pair of jeans because labour is cheaper in China, the money we save on the jeans we pay in taxes as benefits for the people that could make these products here in the UK. Furthermore, we need to borrow the money to pay for these goods because we import more than we export.

It is accepted that global trade imbalances are the cause of the current global financial crisis and yet Government does nothing to redress our trade deficit, even though the cure is as simple as making the things we used to make in years gone by. We need to wake up to the dangers of borrowing to import cheap goods and start manufacturing these products.

We have the capacity to make more than enough for our own consumption by using the 2 million-plus unemployed people, who we paying to do nothing.

There is a belief that buying goods from emerging markets is helping the poor in such countries. Sadly this isn’t the case because these countries have trade surpluses which mean they are producing more than they consume. Wouldn’t it be better if things were organised so that they could enjoy the fruits of their hard work and we used our unused capacity to be self sufficient?

I estimate that the country could create jobs for 200,000 people in factories making goods such as shirts and household appliances for the UK market. Not only would the money we pay for such goods remain in the country, so would the spending power of those employed – and their taxes.

At Ebac, we identified one such product group and are taking action. Around 4 million washing machines are bought in the UK every year, all of them imported.

We are going to start making washing machines next year, creating 200 jobs. We have been able to do this with the help of £1m from the Regional Growth Fund, adding to £6m of our own money. If this support was replicated across more product groups, the effect would be strong medicine for the economy.

Unfortunately, the problem has yet to be accurately diagnosed by the people who run the country.

Mr Elliott is campaigning to highlight the issue of the trade gap. Anybody interested in finding out more can contact him at Ebac at 01388 605061, or visit www.stopgapuk.com.

This was posted in Bdaily's Members' News section by John Elliott .