Reviving British Manufacturing
Why? What? How?
Published on 31. July 2011
Book
Paperback/Softback
43 pages
978-1-906837-29-7 (ISBN)
Description
Britain is running a massive and growing balance of payments deficit. From a position of near-balance in the early 1990s, the 2010 deficit for goods and services - GBP46.2 billion - was the highest ever. For many years we have relied on the success of our service sector (especially financial services) to make good the deficit. However, the financial crash of 2008 suggests we would be unwise to continue placing our trust in this method of plugging the gap. Alan Reece, an academic-turned-successful-manufacturer, argues that we must revive our manufacturing industry. However, the problems are enormous. Between 1997 and 2008 manufacturing output remained flat at around GBP150 billion a year. Allowing for inflation, this represents a real reduction of around GBP3.5 billion a year. The decline in manufacturing has been so steep that important links have disappeared from every chain. Manufacturing in Britain becomes harder as more and more components have to be imported. On top of this, the Coalition Government's policy of ramping up energy prices beyond competitor nations makes it all the more attractive for industrialists to move their enterprises abroad.
Once the workshop of the world, and the cradle of the Industrial Revolution, Britain now ranks around 20th in international league tables of manufacturing output per head, below South Korea and Taiwan. Alan Reece argues that we need to increase our output of goods by GBP10 billion a year for ten years, increasing the workforce employed in manufacturing by 200,000 a year. Exports are vital to our economy, but difficult to increase substantially, given the weaknesses of the British manufacturing base now. A more realistic policy for fixing the balance of payments is to import less, by producing more goods, food and energy for the home market. Alan Reece calls for a Minister for Economic Growth, with Cabinet rank, whose sole purpose would be to ensure that each quarterly trade deficit in goods should be smaller than the last one. The aim should be to reduce the balance of trade to -1 per cent of GDP in ten years. As Cambridge economist Ha-Joon Chang concludes in his foreword: 'If you have thought that Britain could "muddle through" this crisis, read this paper and think again.'
Once the workshop of the world, and the cradle of the Industrial Revolution, Britain now ranks around 20th in international league tables of manufacturing output per head, below South Korea and Taiwan. Alan Reece argues that we need to increase our output of goods by GBP10 billion a year for ten years, increasing the workforce employed in manufacturing by 200,000 a year. Exports are vital to our economy, but difficult to increase substantially, given the weaknesses of the British manufacturing base now. A more realistic policy for fixing the balance of payments is to import less, by producing more goods, food and energy for the home market. Alan Reece calls for a Minister for Economic Growth, with Cabinet rank, whose sole purpose would be to ensure that each quarterly trade deficit in goods should be smaller than the last one. The aim should be to reduce the balance of trade to -1 per cent of GDP in ten years. As Cambridge economist Ha-Joon Chang concludes in his foreword: 'If you have thought that Britain could "muddle through" this crisis, read this paper and think again.'
More details
Language
English
Place of publication
London
United Kingdom
Illustrations
Illustrations
Dimensions
Height: 246 mm
Width: 189 mm
ISBN-13
978-1-906837-29-7 (9781906837297)
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Schweitzer Classification
Persons
Ha-Joon Chang is a specialist in development economics and Reader in the Political Economy of Development at the University of Cambridge. In 2005, Chang was awarded the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. He is author of Kicking Away the Ladder: Development Strategy in Historical Perspective (2002), which won the 2003 Gunnar Myrdal Prize, Bad Samaritans: Rich Nations, Poor Policies and the Threat to the Developing World (2007) and 23 Things They Don't Tell You About Capitalism (2010). Alan Reece. After graduating from King's College and gaining substantial industrial experience, Dr Alan Reece became a lecturer in the Department of Agricultural Engineering at the University of Newcastle upon Tyne. In a career lasting 27 years, he gained a reputation as a highly innovative researcher and a passionate and gifted teacher. He was a pioneer in the application of soil mechanics to the design of earth-moving equipment, a subject that gave rise to a research connection to BT, BP and the British Army. He was particularly keen on teaching design to his students and set up Soil Machine Dynamics Ltd in 1971 to facilitate realistic design projects, particularly with these three giant concerns. These projects manned by students were so successful that he was forced to start employing engineers and to retire from the University in 1984. Turnover increased steadily to reach GBP60 million in 2000, the year the telecom bubble collapsed. SMD is now the world leader in machines that work on the seabed. Alan also established Pearson Engineering as a global leader in the manufacture of specialist equipment for the safe removal of land mines and for related military ground-clearing operations. Pearson Engineering has supported humanitarian organisations involved in removing land mines in former war zones. It became one of the best-performing industrial groups in the North East, developing systems and equipment for the combat engineers of the British and US armies, and the US Marines. Its particular expertise is the development and supply of specialised countermine equipment for armoured fighting vehicles. In 2009, Pearson's turnover reached GBP116 million. In recognition of his success, Dr Reece was ranked in fifth place in Management Today's Top 100 Entrepreneurs for 2011. Today the engineering companies that have grown from his initiations have a turnover of about GBP200m and employ about 600 skilled and professional engineers with about 4,000 workers in the supply chain. Dr Reece established the Reece Foundation and has been a generous donor to good causes. He was the biggest single donor to Cambridge University's Institute for Manufacturing in 2009, whose new building is named in his honour.
Content
Authors. Foreword, Ha-Joon Chang. Editor's Introduction, David G. Green. Summary. Britain Today - The Golden Years!. Figure 1: The UK economy: from balance in 1997 to near collapse in 2006. Figure 2: The growth in the value of financial services between 1996 and 2009. The EU or the Rest of the World?. Appendix: Measuring the Decline in British Manufacturing, Dr Alan Reece and David Merlin-Jones. Figure 3: The flow of trade in the British economy. Figure 4: UK cumulative positive and negative balances and current account. Table 1: Gross value added at current basic prices: by industry. Table 2: Summary of balance of payments: balances (credits less debits). Table 3: Balance of trade in goods and services. Table 4: Trade in goods, summary of exports. Table 5: Trade in goods, summary of imports. Table 6: Exports and imports of selected industries. Notes.