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You only have to look around this Town to see the demise of our manufacturing base - Thames Board, Rylands (even the Rugby team was called "the Wire"), Richmonds, Lockers, Brit Aluminium, Warr Steel, Stubbs, Burtons, Chadwicks, etc etc, sure posters can add to the list of labour intensive manufacturing in this single Town alone. Whilst automation may have compensated to some extent in terms of productivity per worker; and niche industries have taken over; base manufacturing hasn't survived the competition from cheap labour markets. :roll:

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A survey and an article, not telling me anything I didn't know Asp, but they might inform you :wink:

 

 

I am aware that we are in a depression so it is obvious that output will fall. But when looking at trends you have to look at a larger picture than 4 or 5 years. As for the article, well it is the Grauniad which has so much faith in the UK that it takes all its profits offshore to avoid tax (despite complaining when anyone else does the same :roll: )

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manufacturing_graph_550p.jpg

 

Taken from "The Register"

 

"That's from something called the Index of Production and it's a chart of the value of manufacturing output in the UK since just after WWII. It's an index and 100 is defined as the level of output in 2005. As you can see we produce some two and a half times what we did in the 40s, when absolutely everyone, to hear the stories told, was gainfully employed making whippet flanges. So at first glance it would seem to be untrue that we actually produce less than we used to.

 

In a little more detail we could look at the very latest figures here. I've deliberately not included them in the chart because I want to show trends, not the effects of the latest recession. For yes, of course, manufacturing output has fallen significantly in the recession: just as it did in the 80s one and the 90s one. But as you can also see output rose above pre-recession levels soon after the end of said recession: there's nothing in particular to make us think that this won't happen again.

 

One other thing we might note from this chart: manufacturing output seems to be more volatile than GDP as a whole. During the current crisis it's fallen by nearly 15% and yet GDP as a whole has fallen by only around 6%. That rather puts paid to the idea that a concentration upon manufacturing will make the economy less volatile. It's even possible to see a (weak) relationship between more manufacturing in the economy and a larger fall in GDP in the current recession.

 

So, the prevailing wisdom seems to be wrong in certain important respects. As in directly wrong, and entirely inconsistent with this universe. We've not stopped making things and manufacturing does not protect us from recessions. So what has actually been happening with manufacturing?

 

The first and most obvious thing is to point out that the Index isn't measuring how much we make: it's measuring the value of what we make. This is, of course, the only thing we should be interested in: increasing the value of what is produced means that there's more value to be shared among all of us doing the producing. We can all have arguments about how that distribution is done, but the very definition of increasing wealth is that there's more value. Not more things, but more value.

 

The thing that's making that increased value is, well, actually it's all of you, the techies of this world. Once northeners in flat caps hammered out those whippet flanges, before posing for a Lowry painting on the way home. Now there are armies of you writing code and running workstations that help Rolls Royce design their single crystal nickel turbine blades for jet engines.

 

We've moved up the value chain, from simple stuff to complex stuff and people are willing to pay high amounts for that value we've created in complexity (that they are willing to pay is the definition of having created the value).

 

Alongside this, it is also gobsmackingly obvious that fewer people are employed in manufacturing than in the past. But we've got rising production and fewer workers: this is what is known technically in economic circles as a “good thing”. Another way of saying exactly the same is that we've got rising productivity. We're getting more value from each unit of labour employed. And as Paul Krugman (Nobel Laureate lefty economist) is known to point out, productivity isn't everything, but in the long run it's almost everything.

 

If we can manufacture using fewer people then there are more people to go off and do other things: write Grand Theft Auto, wipe babies' bottoms, whatever. Thus we can have, as a result of this rising productivity, more things to enjoy: video games and clean and smiling babies. This is another definition of getting richer. We've got two or three things rather than the mere one we had before.

 

A third thing is that manufacturing has fallen as a percentage of the economy. It is down to about 12% or so by some measures now, where once it was 50% (and China's is still around 50%). But as we can see from the Index, this isn't because manufacturing has shrunk: therefore it must be because other areas of the economy have grown faster.

 

This sort of absolute growth and yet relative decline in economic sectors has been seen before. Back in the day, agriculture was perhaps 80% of the UK economy. Food production has soared since 1700, yet agriculture is now perhaps 2% of the UK economy. The reason being that manufacturing grew vastly faster than agriculture over that time. Now it's that services have been growing vastly faster than manufacturing.

 

None of this is to say that there haven't been problems over these years. Those made unemployed by the rise in manufacturing productivity have, at least sometimes, not had an easy time of it trying to find new work in the new services. Metal-bashing skills do not transfer easily to the NHS, and there are mining villages where virtually no one worked again after the pit closed.

 

But these are arguments for either slow changes, so that changes happen over the generations, or for more to be spent on retraining. What they're not are arguments that we should be deliberately increasing manufacturing as a portion of the economy.

 

The real point here though is the obvious and simple one: manufacturing in the UK has not shrunk. As it hasn't, then it's not possible to say that Maggie eviscerated it, that neo-liberalism closed it down or any of the other nonsense you see in The Guardian and points left. What has actually happened is that manufacturing has become more productive and moved higher up the value chain, both entirely desirable things."

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I was going to produce what Baz has already done. It depends on what factors you are looking at. OK manufacturing employment is down but that is because of rising productivity, and the manufacturing share of GDP is falling, but that is because of changes in global markets between manufacturing and services. But overall the demise of British manufacturing is only proclaimed by those that cannot see further than the end of their prejudices. :wink:

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Interesting phrase from Baz - "moved higher up the value chain", in other words into high end niche technology, but the basic low end (labour intensive) industries like steel making and related production, have declined in competition with cheap labour markets, thus creating a reliance on imports. One only has to look round the derelict factory sites of the North of England - those "satanic mills" have disappeared. :roll: :roll:

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So Obs, you would prefer the workers of today to go back to working in low paid, labour intensive work in steel mills, coal mines and "Dark Satanic" textile mills.

 

Meanwhile Lt Kije doesn't understand that higher productivity means less labour (workforce) required to produce the same amount of goods.

 

Ye gods it's like talking to primary school kids :shock: :shock: :shock:

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Meanwhile Lt Kije doesn't understand that higher productivity means less labour (workforce) required to produce the same amount of goods.

 

Ye gods it's like talking to primary school kids :shock: :shock: :shock:

 

How about the same workforce producing more goods? :unsure: :unsure:

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Keep the "no brainers" out of it Wolfie! :D The whole point is Asp, our exports need to exceed our imports, so we're actually a net earner as a nation, a surplus then provides the funds for improved services etc. Also, our very national security relies on our capacity to produce our own goods and resources. EG: If we need an aircraft carrier over the next 10 years, we'll have to borrow one from the French! :):roll:

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Simple sums. More productivity = less workers required for the same amount of goods. This does not stop increased production, hence manufacturing has been increasing in the long term, while employment has been falling. This is not new, it has been occuring for hundreds of years since the days when all the labour was required just to produce the food required to feed the labour force. Increased productivity in food production meant that labour was released for other things leading to the industrial revolution which speeded up the process.

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If each worker produces more product in a set time then more product is produced in that time. Therefore to produce the same amount of product takes less manpower, or less time.

 

For example lets say it takes 4 men 8 hours to build a car (= 32 man hours). Productivity improves because of technology so that the same car can be built in 4 hours (= 16 man hours). So we can either have the same number of cars built in a day (one) with half as many men (2) or twice as many cars (2) built with the same number of men (4). If the daily requirement is only one car then with the improved productivity only half as many men are required to achieve the end result. Which is why Luddites don't like the improvements in productivity that new technology brings.

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But - if ALL our workforce were employed (including the 2million youngsters on the dole - assuming they'll get out of bed of course!), this provides an even larger output for the nation. Problem is, whilst we may compete on quality, it's almost impossible to compete on price; and if you remember, it was the great British consumer that's been buying cheap imports since the '60s. It would be interesting to see a list of what we actually import, to see what we can't produce here. Put another way: have we the industrial capacity (assuming we had the money) to produce an aircraft carrier and it's components from scratch, starting with the iron ore? :unsure:

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Granted - but my point is that we should have the capacity to produce anything, and retain economic independence and security, which may involve propping up some areas of the economy. The need for a trade surplus will require us to stay ahead of the competition. :unsure:

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Kije. My car was made in Germany but sold in the UK which means it provided jobs for the man selling it, the man delivering it, the man who valeted it, the man who did the PDI, the man from the customs that checked all the paper work, the man who delivered it........ plenty of jobs there!!

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