UK manufacturing ”not made in Britain”

One third of UK manufacturing jobs are in foreign-owned subsidiaries which have ”limited ambitions”, according to a new report.

One third of UK manufacturing jobs are in foreign-owned subsidiaries which have ”limited ambitions”, according to a new report.
British owned firms employ an average of 14 workers and are mainly too small to export goods, warns the University of Manchester based ESRC Centre for Socio-Cultural Change (CRESC).
The study challenges the City view that ownership does not matter, because the pattern of ownership has created a ”new British disease” of broken supply chains.
The research shows British manufacturing is increasingly dominated by small workshops – the number of factories employing more than 200 has halved to 2,000 since 1979.
Three quarters of manufacturing is now in workshops employing 10 or less workers and the number of such workshops has doubled in the past 25 years.
Large technology based firms such as British Aerospace, pharmacology companies and Rolls Royce are an exception to the rule, points out the report.
UK firms lack the structural position and capabilities to build capacity and are vulnerable to investment decisions taken overseas.
CRESC director Prof Karel Williams, from the University of Manchester, said: ”The Coalition government, like its New Labour predecessor, has high hopes for well-managed British firms in sunrise high tech manfacturing.
”But that doesn’t engage with the problems about the fragmented networks of small firms which dominate UK manufacturing.”
The CRESC report proposes a new policy approach of sector wide tax incentives for manufacturing firms to increase output, invest in capacity and upskill their workforce.
”The problem with cutting corporation tax for all firms, as the Chancellor proposes, is that you give away money to lots of firms who do what they were going to do anyway,” says Prof Williams.
”Much better to target the financial assistance on changing the behaviour of small and medium manufacturers.”
Sukhdev Johal, from Royal Holloway University of London, said: ”The measure of the problem is the JCB digger.  This is an exceptional story of product success for a British owned engineering firm but the company cannot source more than 36% of their digger by value from the UK.
”If we look more broadly across engineering, half of intermediate purchases are imported by UK manufacturers, compared with one third in Germany.
”Unless we fix this problem the benefits of any renaissance of British manufacturing will leak abroad to mainly West European suppliers.”

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