UK Manufacturing Industry

Baroness Randerson Excerpts

Thursday 8th December 2011 Lords Chamber

[Baroness Randerson]

My Lords, I make no apology today for drawing on the experience of Wales and its manufacturing. Wales was, of course, a great manufacturing nation. In the past 10 days, Wales has suffered two major blows to its manufacturing employees. First, there is the mothballing of the rolling mill at Llanwern steelworks owned by Tata with the loss of 150 jobs, although there is the hope that they might be brought back when the economy picks up. Secondly, 75 jobs were lost at Hawker Siddeley Switchgear at Blackwood where employees were manufacturing electrical components for trains. These are the latest examples of a steady but steep downward trend in the contribution of manufacturing in a part of the UK, which, as I have said, was a bastion of industry.

In 1990, Welsh industries employed 235,000 people from a population of 3 million. By 2008, this had fallen to 162,000 people, making up 14 per cent of Welsh employment. Estimates suggest that a further 30,000 jobs have been lost since, among them the jobs at Burberry referred to by the noble Lord, Lord Sugar. In 1997, manufacturing was responsible for 28 per cent of Welsh GVA, which had fallen to 18 per cent by 2006. The decline has been pretty well across the board—clothing, textiles, publishing and printing, metal manufacture and mechanical engineering. Above all, in the electrical engineering industry, 18,000 jobs were lost between 2000 and 2008. This was the sector in which Wales had been so successful in attracting inward investment in the 1980s and 1990s under the leadership of the Welsh Development Agency.

This is the crux of the problem. Industries used to be based where the raw materials and the sources of energy were; hence the development of the Welsh valleys, for example. The problem now is that industries are footloose. They go where they can get the best offer and the best skills. In the 1980s and 1990s, the Welsh Development Agency did a superb job attracting inward investment. But that was based on a low-pay model and no country in Europe can establish industry based on a low-pay model now, even if it were morally defensible in the current world. We have to sustain our manufacturing now on other bases.

Sadly, the WDA was abolished a few years ago and Wales no longer has a strong international image to attract inward investments. However, the key issue is that footloose industries now go where the skills are. We need to maintain a strong manufacturing base, of which we should not lose sight when we look at other aspects of the economy and perhaps see them growing and flourishing. There are particular reasons why we want to keep that strong base. First, the pay is relatively good—skilled jobs mean good pay. Secondly, there is a tendency in manufacturing to create, as a proportion, more full-time jobs, and hence better income for the household. The third reason is the export earnings that come from manufacturing. Finally, manufacturing creates other jobs in the supply chain in a way that some other aspects of the economy do not do.

In the 21st century, successful manufacturing regions are those which spot the opportunities, create the skilled workforce required and keep ahead of the game by nurturing technological development. It is a matter of great regret that, for example, Wales as a country is wonderfully placed geographically for the production of a variety of forms of renewable energy but it has failed to develop a manufacturing base for the production of the equipment required for renewable energy production. That is a lost opportunity which, unfortunately, will be difficult to catch up with because other countries are doing it so successfully.

Successful manufacturing economies of the future need a vibrant, innovative university research sector closely linked with local businesses. They need an army of appropriately trained apprentices. I congratulate the coalition Government on the emphasis that they put on the development of apprenticeships, which have increased from 280,000 in 2009 to 450,000 today, and that figure is rising. I also congratulate them on the emphasis that they have put on the STEM subjects at universities. It is highly important to encourage our universities to do the research and to link closely with businesses.

Finally, I thank the noble Lord, Lord Haskel, for introducing this debate. However, he is rather unfair to expect the coalition Government to have turned around the super-tanker of the economy, which in recent decades has been heading fast in the wrong direction. It will take years to turn around that super-tanker.