There, I've said it again

I was watching a BBC programme about manufacturing recently in which the presenter asked an individual something along the lines of "but do you think manufacturing will overtake the finance sector?" – "It will be difficult" came the reply. The discussion was about growing the UK's manufacturing industry. For the record, finance and banking is 8 per cent of the economy, while manufacturing accounts for 13 per cent. With this sort of negative manufacturing nonsense appearing at peak viewing, I despair. As we are often reminded, the UK's manufacturing sector has shrunk; is shrinking. Under Labour, it went from 18 to 13 per cent of GDP, for example, as the finance sector grew on the back of what turned out to be 'funny money'. I have written it many times before, but, since negative images continue to pervade, will write it again. The fact that manufacturing shrinks as a percentage of GDP does not mean that output shrinks in absolute terms. A smaller slice of a bigger cake can still be bigger than a bigger slice of a smaller cake. But people just keep on saying we don't make anything any more because manufacturing's percentage of GDP has fallen, as if that says it all. Well, thankfully, it isn't only me that get's hot under the collar about this claim; I have found an ally in Tim Worstall, a writer on economics. He has recently written a nice piece here. He most recently popped up responding to a Guardian article entitled 'Can manufacturing fill Britain's economic vacuum?'. Mr Worstall's amusing article tackles the usual suspects – lower manufacturing employment (a reflection of increased productivity) and relative decline in its size (manufacturing output value has increased, as measured by the ONS' index of production). To quote from Mr Worstall's article that publishes this index – "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." Now the most recent recession will have dented the short run series, it is acknowledged, but over the long term, manufacturing output rises. But where are all the factories and all the British goods then? Well, two things, as Mr Worstall highlights, we have gone from making a lot of low value parts to fewer higher value parts. Second, many manufacturing suppliers' names do not end up on the product itself, but British parts are in there all the same. There are many UK suppliers to Airbus, but you won't see their names on the outside of the plane. You know, there are some vociferous lobby groups out there that complain every time negative comments are made about certain issues. It's about time that manufacturers acted up when the same tired comments are dripped out. Percentage of GDP or numbers employed do not correlate to absolute manufacturing output – the former can both fall as the latter increases. Manufacturing has changed, not died.