Action for manufacturing growth
1 min read
Last issue, I took a swipe at those that suggest the adoption of a specific target for manufacturing as a percentage of GDP (<a href="http://www.machinery.co.uk/article/29737/rebalancing-the-economy.aspx" target="new">see article here</a>). I said that picking a figure out of thin air – 20% in that case – didn't equate to a strategy, but rather that growth in absolute output (already achieved over the long term) and consistent growth above GDP average growth for manufacturing were a better focus to deliver a higher percentage of GDP.
Well, the CBI has released a considered document in line with that sentiment, taking it further and to a greater level of detail.
Titled 'Vision and ambitions for UK manufacturing', the four-page PDF (http://chilp.it/77828e) says: "Delivering on three broad ambitions to improve productivity, enhance innovation leadership and increase export growth will be central in achieving the vision".
On productivity, the CBI says that, while UK manufacturing productivity is "already very good" at 4% per annum, and consistently above that of the service sector, it should be improved to 5% per annum, taking it ahead of the USA, which is 4.9% per annum, and ahead of Germany, too, which is 3.9%.
And, if UK manufacturing were to achieve a year-on-year growth rate of 3.5%, rather than an expected circa 2% growth rate for the whole economy, then output would total $488 billion by 2020, instead of just over $400 billion – currently, it's $323 billion. To put that into context, that would be well ahead of France, and about the same as Italy, were those two countries' manufacturing sectors to grow only at 2% per annum. Germany is almost $1 trillion in 2020 at that growth rate, however. As for exports, by almost doubling our current UK export growth rate of 4.8% for manufactured goods, we could move beyond the OECD average, ahead of France (6.8 per cent), Italy (5.7%) and the USA (7.8%), but still behind Germany (10.3%), which itself is well behind China.
And to make these three objectives reality, the report cites 14 key actions, split 5, 5, 4 between productivity, innovation leadership and export growth.
On the first, the report asks for existing capital allowances to be reviewed and simplified, while skill levels must be improved ahead of peak retirement in the next decade. Innovation leadership asks that Government commit to the R&D tax credit, and adopt strategic public procurement to drive business innovation and investment. On exports, an expanded role for UKTI is one of the recommendations, with focused support for sectors having potential for export growth.
With its specific targets and linked key actions, the CBI document appears to offer a coherent basis on which to expand manufacturing's role in the UK economy. It will, of course, require both Government action and that firms subsequently take advantage of what's on offer (See Last Word article here).
First published in Machinery, January 2011
