We need a manufacturing resurgence more than ever. How can we bring it about?

28^th June 2016

There’s been a familiar narrative emerging since Thursday’s vote – this was the left behind white working class getting one over the London-centric political and economic elites. I think that analysis only takes us so far as it glosses over diversity within the Leave vote. Indeed, what divided Remain and Leave voters was not class but “authoritarian” (or social conservative) and “libertarian” (or liberal) values. But a key reason that Leave won was that it got support from those people who felt alienated in both of these dichotomies – social conservatives who have been left behind in post-industrial areas. The key issue now is what policy-makers can do about this in the post-Brexit landscape.

Where manufacturing is most important to a regional economy, the Leave vote saw big increases – in the East, where goods exports are 20.8% of regional GDP, there was a 56.5% Leave vote; 28.4% of Wales’ GDP is from goods exports and it saw a surprise 52.5% vote. Perhaps the best example is Sunderland, whose main employer Nissan is a key exporter. Leave won by 22.6%.

Commentators have been quick to deride Leave voters in areas so economically reliant on exports to Europe. So why has this happened?

The problem is that manufacturing is central to regional economies, but is under threat from increased global competition. So the perception of UK manufacturing – a key source of stable, high wage employment – is that it is continually under threat. That gives those working in the sector a real sense of precariousness. See the collapse of the steel industry in Wales and the North East (Redcar voted by a massive 32.4% for Brexit).

More than ever, we need a manufacturing strategy that nationally ensures the terms of trade for manufacturing are a material consideration of economic policy-making, and locally on providing export support, building back supply chains and addressing chronic skills shortages. For too long, Britain has lagged behind our European competitors in this regard – France, Germany and Italy all have better national and local strategies for their manufacturing sectors. The result has been to undermine the regrowth of post-industrial towns and cities and to undermine security for those employed in the sector.

We shouldn’t exaggerate. UK advanced manufacturing is world-leading and highly successful. But employment in advanced manufacturing requires advanced skills that our skills framework isn’t delivering for people. That means the sector relies on EU migration to gain access to a skilled workforce, hence the importance of freedom of movement to our economy. Meanwhile, people in unskilled roles both within the sector and in the services activity it supports – such as transport and warehousing – face more competition from migration than those who have moved up the value chain.

Brexit will undoubtedly be a challenge for British manufacturing. But Britain still has a fantastic opportunity to ride the next wave of industrial automation and digitisation – what has been labelled Industry 4.0 – if we can get this right. We need to be thinking about how to maintain the success of our major manufacturers whilst helping smaller firms in supply chains to access the benefits of Industry 4.0. Crucially, we have to do more to ensure we boost digital skills so that more high value, secure, meaningful employment is available around the country.