Ben Carpenter Merritt
Manufacturing Policy Manager, Policy Connect
Supporting manufacturing and utilising local strengths is the best way to achieve the win-win of addressing the UK’s productivity problem while also increasing employment.
The 2008 crash had a huge impact on manufacturing productivity, which dropped from nearly 5% – outperforming the service sector – to less than 1% a year1.
To help get manufacturing back up the curve, the government created an Industrial Strategy2 with the joint aims of strengthening the foundations of productivity (Ideas, People, Infrastructure, Business Environment and Places) and addressing the biggest challenges of the future; AI and the Data Economy, Clean Growth, the Future of Mobility and the Ageing Society. Learning from the past, government has recognised that addressing these underlying challenges is impossible to achieve from Westminster. Instead, local industrial strategies are being developed across the country to be jointly signed off by ministers and the chairs of local enterprise partnerships (LEPs)3.
The opportunity localised strategies provide
The clear opportunity of this programme is that local challenges can be addressed by those best placed to understand and address them. Manufacturing has a unique ability to develop areas by providing highly-paid and highly-skilled jobs and adding value to local economies.
As manufacturing currently only accounts for 10% of UK output4, how can these local strategies help increase that share, while also driving productivity and job growth in manufacturing?
The industrial strategy challenge facing regions
Each region’s requirements differ hugely, from the predominantly automotive-focussed manufacturing of the North East, to the ceramic industry in Staffordshire. The challenges faced, and the solutions needed by manufacturers, will not be easily transposed from one region to another. This makes it the more important that government does treat the LEPs as their partner, not use the local strategies to impose its own ideas. It’s the local delivery bodies that can assess, for example, whether conditions post-Brexit will need new, geographically close supply chains. Only they know how best to drive productivity through investment in skills, innovation, infrastructure and business growth.
Staying ahead of global trade post-Brexit
As we look towards a more uncertain future, one in which the UK must increase global trade, the country needs to increase the value added in manufacturing. We have seen this already, as many manufacturers have looked to reshore or localise their supply chains to protect their production post-Brexit. Further reshoring of manufacturing will also be required, not only to meet domestic demand, but also global demand in what seems to be an increasingly unstable world.
A truly successful local industrial strategy must prioritise the UK manufacturing sector, as this will add value to regions, create high-quality jobs, enable us as a nation to capitalise on global trading opportunities, and provide security of supply.
1 EEF, the manufacturers’ organisation. (2018). Productivity: the state of the manufacturing nation.
2 BEIS. (2017). Industrial Strategy: building a Britain fit for the future.
3 BEIS. (2018). Local Industrial Strategies: policy prospectus.
4 EEF, the manufacturers’ organisation. (2018). UK manufacturing facts, 2018/19.