"And what will happen to us?"

One of the reasons comments returned is that I missed the knowledge and inspiration of the commenters, from whom I have learned - and continue to learn - so much. Thank you.

I wrote in my post on Rubery Owen about :

"the infrastructure which is so essential to any hi-tech industry - the network of small, specialist-skill providers which grows organically round the major firms. I'd imagine that in China and Korea there are a host of such small firms servicing the computer industry - the motherboard and memory manufacturers etc. It's impossible to build those sort of skillsets quickly. Take a look at the list of engineering contractors and weep for a lost past - and a bleak future"

and lo - commenter jrackell pointed me to James Dyson's Dimbleby Lecture, containing the following :

"the biggest lesson came four years ago when I located our assembly in Malaysia. Much as I was resisting the change, there were very clear reasons why we had to change direction.

We needed to invest heavily in research and development. But our manufacturing costs were going up and our market place prices were going down. And we were trying to expand our factory in the face of local planning opposition.

Meanwhile all our competitors were manufacturing in China, while we were watching our profits go into freefall. I could see our demise.

But the biggest problem was that we had no local suppliers. Our British three-pin plugs were made in Malaysia. Our polycarbonate plastics came from Korea. Our electronics came from Taiwan. It was a logistical nightmare. We needed our suppliers on our doorstep so that we could drive them to improve their quality and keep pace with technology.

In the 1970s, when I was developing the Ballbarrow, I needed some bent metal tubing. I got in my car and went to Birmingham. In the space of a few streets, I found workshops and suppliers who between them could provide the tubing, cut it, bend it and coat it. It was an extraordinarily vital environment. And it was absolutely essential to the small engineering entrepreneur.

You might ask what happened to these British suppliers and subcontractors? Quite simply: we drove them out of existence. Employment and property laws made it difficult for them to take on extra staff and premises. They needed a tax regime that appreciated the volatile nature of their business. Instead, Governments imposed PAYE and hammered them with high interest rates, year after year. By the mid-1980s, most had gone to the wall."

I rest my case. But there's a lot more in the Dyson lecture.

I'm frequently told that championing manufacturing is yesterday's game. That we live in a post-industrial society. That the service and creative industries have replaced manufacturing.

Well consider this:

Of the world's ten largest corporations by revenue, nine make big, heavy things. Like cars or ships' turbines or computer hardware or consumer electronics. These companies rely on their engineering and their technology – not their styling – for their wealth. Only one – WalMart – is a service company. Look at the most profitable companies and again the facts speak for themselves. In the top ten, only three are service companies. And as for the world's least profitable company? Why it's Vodafone, a service company that made a loss of more than 15 billion dollars last year.

So why does Britain need a manufacturing industry in this supposed age of the service economy?

My answer is simple. We have no choice. Only one in seven British jobs is in manufacturing, yet they generate nearly two-thirds of exports. Manufacturing creates the wealth and spending power that feed the service industry. It's obvious. The rest of the world relies on manufacturing for its wealth. Why do we think we can be different? If we want to maintain our position alongside other leading nations, we've got to join the rest.

We must take steps now. In ten years time China, with its mantra of employment over profit, will not only be the workshop of the world, it will be the technological superpower.

And what will happen to us?

Laban :

"I suppose the theory is that a combination of lethargy and convenience (between time zones) will keep the dosh rolling into the City, even when world manufacturing is centred in Asia.

Just the way that Florence and Antwerp remained the capitals of world banking despite the rise of Britain, the USA and Germany, eh ?

It may take time, but inevitably the services will follow the manufacturing."

Dyson again :

Britain's service industries will wither without their manufacturing customers. Call centres and software developers are already disappearing to efficient service economies. Such as India.

Innovation will be stifled. We will be surrounded by products that we have not made. That's something that is already culturally destructive. Ultimately we will be at the mercy of the buying habits of Chinese shoppers. The impact on the trade deficit will be ruinous.

The loss of manufacturing expertise will compromise our military strength. History repeatedly shows the correlation between a nation's wealth and its diplomatic and military powers. Before the Industrial Revolution, Britain accounted for just one fiftieth of the world's manufacturing output, while China spoke for a third.

Fewer than a hundred years later, China had been invaded by a small British army. Its industry was now backward. Britain, with two per cent of the world's population, was making nearly half the world's goods. And politically we led the world.

Now Laban doesn't want to invade anywhere or dictate to anyone. But it's sensible not to put ourselves in the situation where others can do that to us. At least the current invasion is self-inflicted.

Dyson :

In 1950, we produced a quarter of the world's exports; in 1970, just one tenth. By the mid 1980s our international goods trade was in deficit. Fast forward to today.

We rely on our service industries to prop up our alarming trade deficit. And this sorry situation, is often presented as the conclusive argument, that we have tipped from a manufacturing economy to a service economy.

Time and time again, I'm told Britain can rely on service industries. "It doesn’t matter if we buy all our low-cost goods from abroad," I hear. "We can rely on our service industry to finance it."

For which see my post quoted above. Services will in the end follow the money.

Look at those trade figures. The cultural collapse and the economic collapse ran in tandem. Contrast with Japan or Germany- a lot of flattened buildings in 1945, hi-tech export giants within 30 years.

Dyson :

Since 1997, we have closed 18 physics departments and 28 chemistry departments.
As a result, we now produce only 3,000 physics graduates a year. Compare that to an astonishing 15,000 psychologists !

Makes sense of a sort. We're living in a fool's paradise where mental illness is one of the few growth industries. I bet counselling of all sorts is growing too - drug, alcohol, smoking, eating, "sexual health". But where will the money come from? Can our 3,000 physicists create enough wealth to feed 15,000 trick-cyclists ?

I think not. One of the effects of the global financial crisis IMHO will be a move away from the dollar and sterling, the weakening of US and UK financial institutions, and the start of the decline of London and Wall Street. At some point we may HAVE to start making things again if we want to eat.




(Thanks also to jrackell for this Dyson MIT lecture (video) - fascinating stuff, and to Mark Holland for links to this archive cinema of the Black Country)