The Future of Manufacturing

We live in an interesting world at present, full of contradictory and paradoxical policies, whether these be financial or political, where this country still lacks a definitive and clearly articulated long-term strategic framework for post-16 education and training. There is still uncertainty about the future of manufacturing in this country, and how this country can improve its performance and competitiveness within the global economy.

One classic example is the future shape and purpose of manufacturing and construction in this country. Recent statistics show that major transformations are occurring in employment patterns. There are now more qualified social workers in employment than there are builders. Membership of professional associations associ¬ated with law and accountancy has gone up by almost 50%. By sharp contrast, construction has lost a quarter of its workforce and manufacturing has lost almost 800,000 jobs between 1990 and 1995. Service-based industries gained just over 200,000 jobs in that period.

The Government and its various Ministers talk enthusiastically about the need to restore the manufacturing base of the UK, but they then operate policies, for example in the areas of education and training, that weaken that endeavour. The application of a hard free-market-driven approach seriously weakens the ability of educational institutions to offer quality provision and to increase the stock and flow of highly-qualified people into certain areas of strategic importance such as manufacturing, engineering and construction. The education and training of craftpeople and technicians is equally as important as that of graduates and chartered professionals.

Decline of manufacturing

Over the past two decades we have witnessed the wholesale destruction of manufacturing in this country. Many areas of manufacture and production in which we were world leaders a few decades ago have rapidly vanished. Even accepting that many of the companies were over-staffed and operated rigid and inflexible work practices, plagued with demarcation disputes, the rate of destruction is now seen to have been disastrous and has most certainly contributed to our poor economic performance and has seriously weakened our competitive edge within the global economy.

Many have argued that we have reached the critical threshold and it is essential that long-term strategies are now developed to regenerate a manufacturing base, different in kind to that which previously existed, but without it this country cannot hope to compete with our competitors and will further slip down the international league tables.

This country must offer quality and value-added services and products that the rest of the world will want to purchase. Some UK-based companies are world-class and successful, but at present many are not.

Need for a balance

The financial health of any country must surely depend on a sensible balance of manufacturing and service-based industries. They must complement each other and no one element should be given undue emphasis. It has been said that the disappearance of one per cent of the manufacturing base requires a ten per cent replacement by service-based industries. This fact alone highlights the absurdity that this country can survive within a global market, reliant solely on a service-based econ¬omy. That seemed to be the political philosophy of the ’80s and I believe that we are now paying the penalty for that rather shortsighted belief. Even the arguments and drive for greater inward investment are now being questioned by many commentators. After all, retrenchment could occur at any time as a result of changing political or financial priorities back in the home country. Many overseas companies who have invested in the UK often bring their own senior staff and continue to use their own home-based banks and financial services.

A number of politicians argue that it is the global economy that is the ultimate determiner of whether we have employment bases in manufacturing and construction. After all, they would argue, why should we have a domestic construction industry when one can import the expertise at lower cost? It surely does not make sense for this country to be dependent on others to build and maintain the country’s infrastructure, much of which is of strategic importance. One aspect of this argument is sel¬dom heard: after all, if one maintains a strong and viable construction industry, then one is in a position to tender for lucrative overseas contracts. A number of people I have spoken to who support the market economy seem reluctant to accept this rationale. It is as if they have thrown in the towel – or should it be the trowel? – completely, and are happy just to allow a free deregulated market mentality to operate.

Another factor which intrigues me is that, when companies declare their profits or losses and the subsequent dividends to their shareholders, great emphasis is given to the level of these dividends, or to the fact that they have significantly downsized their company and apparently increased their efficiency and productivity, but very little mention is made on the resultant impact of the recession and downsizing of companies on educa¬tion and training and the development of the workforce in their companies.

It always appears that the shareholder occupies the apex of the pyramid and the last thing that is mentioned is the impact on the employees. They can be made redundant or receive little or no re-training or upskilling. One of the key flags of a world¬class company is the fact that it is employee-driven and the company invests heavily in lifelong learning and retraining. This latter aspect is greatly assisted by the development of meaningful and more effective partnerships between employers and educational institutions.

Changing the nature of learning

It is now accepted that colleges and universities need to approach their work in very different ways, offering new provision, delivered in more enlightened ways, and making certain that the provision matches the needs of the employer and the changing nature of work. It is accepted that many engineers, for example, do not possess the necessary knowledge, skills and ‘graces’ that will be needed for the future nature of work, and to make their contribution to develop world-class companies. Lifelong learning is now essential to cope with the ever-accelerating knowledge- and skill-base and all the consequences of the global economy and greater competitiveness. The Government, and the Funding Councils, must accept that the nature of learning is being transformed and there should be a sensible and cor¬rectly differentiated funding to bring about the necessary changes and to encourage partnerships between them and the employers.

Educating and training engineers and construction people is expensive, by the very nature of the skills, knowledge and understanding that they need to acquire. There therefore needs to be a long-term strategic plan developed, properly resourced, that recognizes the elements that contribute to that high cost. Employers, too, must be helped by the Government to encour¬age life-long learning. This does not mean that we have to revert to the old levy system, but there surely must be other ways of offering incentives, possibly through a reformed tax regime, to companies that would allow them to accept greater responsi¬bility to develop a more highly-qualified workforce. There are political sensitivities in this approach, and many politicians are reluctant to introduce statutory legislation. But, as the world of work changes and the influence and importance of small and medium establishments increases, it is these very companies that need financial incentives within a national framework. Recognition should also be given to the reprofiting of the workforce with its increasing emphasis on teams and the importance of increasing the stock and flow of highly-qualified craftpeople and technicians as well as graduates.

Unless action is taken, I fear that manufacturing and construction will fall below that critical threshold, and once it does it will be lost for ever and this will raise serious questions about this country’s place, not only in Europe, but within the world.

Summary

The implications of the decline in the UK’s manufacturing base and its replacement by service based industries are discussed. A proper recognition of the changing nature of learning and the importance of increasing the stock and flow of highly-qualified craftpeople and technicians as well as graduates is urged.

First published in the Journal of the Foundation for Science and Technology -‘Technology, Innovation and Society’ in Summer 1996.