Manufacturing is still the lifeblood of Britain. It not only contributes more to GDP than financial services, it is the key to our renewal…

Needed – a national plan to rebuild Britain!

WORKERS, DEC 2010 ISSUE

An economy should manufacture a range of things that people need; it should provide opportunities for people’s subsistence and welfare; it should ensure everyone has the right to work through an expansion of jobs and skills and, crucially, it should generate genuine wealth for the nation through industry that can fund social progress. These are the purposes of a proper economy in contrast to the reign of illusion based on fantasy speculation and credit we have experienced.

Restore manufacturing

We have short-sightedly allowed our long heritage and culture of making things to decline and disappear in favour of a reliance on non-productive services, such as financial speculation, management consultancy, services, etc.

But manufacturing has been and still is, though greatly reduced, our life-blood. Accordingly, we have let an imbalanced economy develop, incapable of providing self-sufficiency or dignity to its people. The imprudent nature of this policy has been brought home sharply with the recent financial crisis, and the importance of restoring manufacturing in Britain is starting to be spoken about again. The myth that we could all survive off finance and services has been blown to smithereens by the financial imbroglio.

Even after all the attacks on it, manufacturing is still alive in Britain.

Though decades of de-industrialisation have happened, manufacturing and industry remain. Up to the recent financial crisis, more was still made from manufacturing than from the financial sector. Moreover, the benefits of manufacturing, the uplifting core of a real economy, flow immediately to society at large, to workers strengthened in their communities by jobs, skills and culture.

Manufacturing represents nearly 13 per cent of Britain’s GDP, 75 per cent of business research and development (R&D), half of Britain’s exports and 10 per cent of total employment. Britain is the sixth largest manufacturing nation in the world after the USA, China, Japan, Germany and Italy, larger than France, and we are a leading exporter of high-tech goods.

We have world-admired strengths in the aerospace, Formula 1 automotive, robotics and industrial biotechnologies industries. For example, Britain’s aerospace industry generated sales of £22.2 billion last year, a 5.4 per cent increase. Exports accounted for 70 per cent of the total, which includes defence equipment as well as commercial aircraft, and the workforce remains steady at 100,000. Workers in these industries have high levels of skill, which can be put to their advantage when advancing their collective interests.

The manufacturing sector is still over 50 per cent larger than the financial sector. It is significantly more important than construction, mining and quarrying, utilities or agriculture. Basically, manufacturing is more productive than services. In 2009, British manufacturing produced goods worth £150 billion and was responsible for 2.6 per cent of world manufacturing output.

Nevertheless, the shift against manufacturing in Britain’s economy has been dramatic. Manufacturing accounted for over 30 per cent of Gross Value Added (GVA) in 1970, but by 2007 it accounted for less than 13 per cent; while services made up just over half the economy in 1970 but now represent around three-quarters of economic activity. This has had a serious impact on the balance of payments, as import growth has outstripped export growth. Since 1995 manufacturing output in France and Germany has grown by more than 16 per cent. Britain’s has fallen by 1 per cent.

What needs to be done?

For decades there has been a short-termist culture that has prevented the development of manufacture; there has been an unwillingness to take long-term strategic decisions to build up industry. Instead the establishment has chased the reckless, socially divisive dreams of finance capital.

Manufacturing must be restored and expanded in Britain if we are going to have a vibrant, comprehensive economy, if we are going to have access to a range of jobs and skills: in other words, be able to provide a dignified future. We desperately need a second industrial revolution. Yet more is required than pleading arguments, glib postures or good statements.

Productivity in both manufacturing and services is a third lower than that in Germany, France and the US, because Britain’s bankers invest far more abroad than at home. Britain invests only half as much as its main competitors in research and development and over a third less in plant and equipment. Only 3 per cent of banks’ lending in the decade before the crash went to manufacturing. Three quarters went to commercial property and residential mortgages. Investment in manufacturing adds to growth; the others don’t.

Against this, Britain invests a bigger share of its income abroad than any other major economy. In 1992 accumulated overseas investment was equal to one and a half times total national output. Now it is over three-and-half times. In 2004 British firms spent £52 billion on foreign direct investment – enough to employ nearly two million workers for a year. Far more was spent, over £140 billion, on shares in foreign stock exchanges and lending to foreign banks.

This flood of capital overseas started when the Thatcher government ended controls over capital export. It has turned the City of London into the world’s No.1 casino for financial speculation. It is time to reapply controls over capital export.

A bank for reconstruction

Banks should lend to British industry but the culture of finance capital is anti-industry. Therefore, a new state-directed Bank for Industry, Development and National Reconstruction must be created, out of the clutches of finance capital and non-reliant on their favour. It should make funds available at low or negligible levels of interest, lend according to a principle of long-term strategic national interests, invest either to build new assets or to increase production.

The introduction of this measure should be a key aim of both industrial trade unions and industrial capital, who should see that their interests do coincide on this issue and combine together to force through the establishment of a new type of bank.

Acting in concert, manufacturing capital and the labour movement have sufficient political, social and moral strength to enforce this national priority over the sectional interests of negligent finance capital. We must stop bank bailouts and end crippling interest repayments; we must funnel our state funds to a socially enhancing financial instrument in order to enlarge the real economy and promote industry and skill.

National plan to reverse decay

Though in some places the idea of a national plan was discredited by the failed plans of the 1960s and 1970s, every economically successful nation has one because nations are in competition with each other in much the same way that companies are in a contest with their rivals. We are one of the few nations not to have one. Is this staggering complacency or deliberate neglect on the part of our capitalists?

Workers need not only to push one on to the national agenda but also to exert the social and industrial pressure necessary to ensure it is implemented. At its core should be a commitment to restoring manufacture as the leading sector. Where there is a will, a way will be found. We must be serious about our survival, about handing on something to the next generation.

There are good industrial policies that can be exploited as the national plans of successful nations create the best conditions for industry to flourish. We should not be afraid or reluctant to copy other people’s experience. Certainly we can’t afford to accept ridiculous excuses of “minimising government”, as regeneration will involve effective public spending – including the thorough renewing of the Victorian infrastructure such as rail, water, sewers, waterways, docks, and of other socially necessary networks such as communications and energy – as well as public investment in productive enterprises for which private finance is not available and which is deemed essential to the vital interests of the nation. An industrial audit of Britain needs to be undertaken, highlighting what has been lost, what needs to be restored and in which order (according to the strategy of the plan), and what needs to be developed that is new.

The power of manufacturing capital and of manufacturing trade unions needs to be raised to defend and promote industry. The decay, de-industrialisation and abandonment of manufacturing and physical science can be attributed to and blamed on the concentration of political power in the City of London, on decisions and policies taken by people who know little about anything but money, and, by the look of recent events, know precious little about that category either.

We spend far less on science, innovation and skills than many other countries. Government has signalled that research funding faces cuts of between 15 and 30 per cent, which drove the Institute of Physics to declare it was “disastrously short-sighted.” Science and innovation have the potential to be one of the drivers of economic growth. Science needs to be defended, preserved and expanded; it needs to be fought for.

We need a national plan to ensure we have the industries we require, and the workers to make those industries run.

Though spending on research and development in Britain has increased, we continue to invest at far lower rates than the most successful countries. We have lacked the skilled workforce of other leading manufacturers for many years. Practical steps to rectify this must be taken by both unions and manufacturers in all our industrial sectors. To have a strong manufacturing sector requires a set of complex skills. There needs to be a renaissance in the provision of apprenticeships. We must train a modern, skilled, younger generation of British technicians across the whole scope of industrial and scientific life.

We need the right workforce. There’s nothing wrong with beauticians or psychologists or town planners in the right proportions inside a balanced economy. But they aren’t the sorts of jobs that build a world-beating manufacturing-led economy and that generate new wealth. We've been pretty poor at creating those. Britain’s growth in highly skilled jobs has been one of the lowest in the Organisation for Economic Co-operation and Development countries since 2001. We need to invest in these skills. The national plan should audit our economy, identify where there are essential, missing industries and skills that must be restored and propose strategies to relaunch them with state support, at least initially.

Workers and manufacturers must come up with practical answers to this problem, not leave it to chance or the powers that be. For instance, power companies desperate to attract more young people into the sector are backing a new, industry-wide qualification to improve career progression. Energy companies (including E.ON, EA Technology and CE Electric UK) are in discussions with the government-backed National Skills Academy for Power to introduce a national qualification to help workers transfer between employers and pursue a career. At present there are myriad qualifications and training schemes on offer.

Fears have been growing in the industry that not enough people are entering the profession to offset an ageing workforce. Some 80 per cent of the UK’s energy workforce is expected to retire by 2025. A recent poll has revealed that more than half of school leavers would not consider a career in science, technology or energy, which is an appalling state of affairs. The status of science and manufacture must be raised.

In particular, if Britain wants to keep its lights on, there must be a future reliance on nuclear energy and clean-coal technologies, as green renewable sources will not provide sufficient energy for an industrial economy. But we know the existing nuclear power stations are ageing and we need to be building replacement capacity virtually immediately. Yet there are fears of the current plans for 10 new nuclear power stations in Britain getting mired either in a bog of government negligence or local planning system hitches, let alone a more extensive building programme.

Rising again with the onset of the Depression, the idea of protectionism – latterly shunned as if it was the plague – is becoming ever more popular. Our class should press for its implementation: workers under capitalism need the economic defences of the nation to protect their interests. Remember, the industrial power and might of the USA largely developed and took off under conditions of protection, before World War 1.

Over-reliance

Britain is too reliant on sectors that don’t create wealth. In the private sector, talented people have been drawn away from jobs in science and engineering by the high salaries and comparative job security of the City. Manufacturing jobs have collapsed. Public sector work has risen strongly (soon to be reversed as public expenditure does get cut).

The finance sector doesn’t create wealth. It’s supposed to allocate it more efficiently. But it’s clear that in recent years, financiers have become more interested in efficiently allocating capital into their own back pockets. Whereas efficient public services help the rest of society to be more productive through good infrastructures and provision of a healthy, well educated population and are important services that create the human and social potential for wealth creation, they don't actually create wealth either – that is the preserve of industry.

The working class is now the upholder of democracy. Finance capital (representing a tiny minority) is the hostile impulse propelling the state towards ever-greater forms of dictatorship, as it attempts to cling on to power and prolong access to enormous financial pickings.

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