Can manufacturing deliver the region from the post-downturn doldrums? Neil Hodgson reports
MANUFACTURING is back in fashion, according to the coalition government.
Minister for International Security Strategy and former international banker, Gerald Howarth, insists the Government recognises the value of “metal bashing” to the UK economy after the near collapse of the financial markets, the cause of which, some would argue, can be traced back to the Conservative government’s “Big Bang” of 1986 when the finance sector was given carte blanche with the almost predictable consequences that began unfolding in 2008.
Mr Howarth revealed his “Damascene conversion” as key speaker at the start of work at Birkenhead shipyard Cammell Laird last month, on the Royal Navy’s Queen Elizabeth II aircraft carrier.
He said: “I was an international banker, but it is important we remember that this country does not survive on financial services alone.
“What has happened over the past 18 months should send out a signal that we cannot build a sound economy purely on financial services.”
It is, therefore, fitting that the manufacturing sector is enjoying something of a renaissance after suffering at the hands of cheaper overseas rivals by improving efficiencies and developing innovative new products.
Recent figures show that manufacturing is worth £155bn to the UK, employing 2.6m people at 133,000 companies.
Figures also show that 75% of business R&D in the UK is carried out by manufacturers and is worth almost £12bn, while the UK aerospace industry is the second largest in the world, employing more than 100,000 and worth £17.9bn.
The North West and Merseyside is home to some of the UK’s biggest manufacturing interests and is sharing in the sector’s long overdue revival, led by the automotive, biopharmaceutical and aerospace industries, represented by the likes of Jaguar Land Rover (JLR) in Knowsley and Ellesmere Port’s Vauxhall plant, the Novartis and Eli Lilly pharmaceutical plants in Speke and the Airbus wing-making facility in Broughton.
Recent statistics point to a vibrant and sustained manufacturing recovery, despite the general economic malaise.
Employers’ organisation the CBI reported the fastest output rise in 15 years for manufacturing in the three months to July as demand for UK-made goods continued to strengthen.
The strongest level of domestic demand since April, 2004, was also recorded in its quarterly review. Engineering organisation the EEF said it expects manufacturing to grow by 3.8% this year and 3.4% in 2011, outstripping the economy as a whole, even after the Budget statement, public spending cuts and slower forecasts for growth in world trade.
It acknowledges that some individual sectors will enjoy strong growth on the back of weaker sterling and demand from emerging markets, while others will show only moderate prospects for this year and beyond.
But it says the turnaround in world trade flows has been the driving factor in UK manufacturing’s recovery, with emerging markets like Brazil, Russia, India and China playing an important role.
EEF North West director, David Ost, welcomed the encouraging predictions and, in response to Mr Howarth’s comments, added: “We have to tackle the myth that the UK doesn’t have a manufacturing sector and how it can play a more important role in the future than it has done in the recent past.
“Our over-reliance on financial services has been exposed during the recession and the shift to a more balanced economy is a huge task but one we have to start now.”
The latest figures from industry body the Manufacturing Advisory Service North West also point to a revival in the sector’s fortunes, but highlight a new worry among owners eager for growth, on top of cash flow and sales, in a need to develop new products.
However, Merseyside companies have enjoyed significant success in recent export-led growth.
Last week, JLR posted an almost £300m turnaround in quarterly profits as sales, particularly in overseas markets, continued their recovery.
Land Rover is also in talks to build a new manufacturing plant in China, which it said will not affect Halewood’s New Freelander 2 production.
