People have a fetish for smelly, bloody and dangerous occupations where the returns are poor and the competitors numerous.
No, I’m not talking about the British kink for dominatrices.
I mean the warm feeling the public has for manufacturing – and not even the slick, highly-skilled factories that we have in the UK and the US, but the grubby assembly lines that migrated to China.
It’s enough to make William ‘Dark Satanic Mills’ Blake turn in his grave.
The manufacturing myth
The Register recently published a perfectly reasonable article about the UK’s manufacturing sector [1]. It explained how British manufacturing output has actually more than doubled in value since World War II, as shown by the following graph:
[2](Click to enlarge): More output, fewer factories = a good thing
The graph is the Index of Production [3], from the Office for National Statistics. It is adjusted for inflation.
The article’s author, Tim Worstall [4], explains that the myth of British manufacturing ‘decline’ is so potent that reality is shut out of the conversation.
He writes:
Woe unto us for we don’t make anything any more. We’ve given up on manufacturing and that’s what ails the UK economy. We must therefore invest heavily in a renaissance of making things that we can drop on our feet and all will be right with the world.
You don’t have to be all that much of a newspaper fanatic to recognise that mantra: it’s been repeated so often that it has become the received wisdom. We even have politicians advancing ideas about how we might manage to achieve the desired outcome.
There is, however, only one teensie tiny problem with the whole idea. It ain’t true.
Tim’s article covers most of the important points:
- We’re generally making higher value things – a good thing.
- We employ fewer people to get more output – a good thing.
- Since manufacturing output hasn’t shrunk – in fact it’s grown – then if it only makes up 12% of the economy compared to a peak of nearer 50%, this means other aspects of the economy have grown even faster – a good thing.
Great stuff. Yet what’s Tim’s reward for debunking one of the most potent myths in the UK? A slap on the back? A knighthood?
No, a comment thread on his manufacturing article [5] full of the usual hysterical hand-wringing, with some gratuitous name-calling thrown in.
The case for more manufacturing
The arguments for manufacturing are always the same:
- Manufacturing would protect us from recession
- We should make things people actually need
- The service sector isn’t the real economy (a country can only employ so many hairdressers)
- Britain was once the workshop of the world
- China will win, because the Chinese work harder at real jobs
Manufacturing fans may protest that their arguments are slightly more sophisticated, but that’s essentially what it boils down to.
Are they right?
What do you think?
Manufacturing would protect us from recession
This is just self evidently wrong. If nobody is buying anything then nobody wants your manufactured products, and it’s much more expensive to mothball a steel factory than an office.
Besides, Germany and Japan are the favourite examples of the pro industrialists (no list is complete without the roll call of Sony, Seimens, BMW, Yamaha, Bosch, Volkswagen and so on) yet Japanese and German GDP fell by 5% in 2009 – far worse than the US decline of 2.4%, and even worse than the UK’s 4.8% decline (Source: OECD [6]).
We should make things people actually need
Have you actually been shopping recently for things people actually need?
My dad used to regularly service his prized woodworking tools. Now a decent hand saw [7]
The whole reason people like me can save up so much money [10] is because ‘the things we need’ are cheap to buy. You don’t have to work for three months to buy a fridge anymore. The same downward pressure on cost is evident from cars to off-the-shelf helicopters.
Making stuff is a bad business. Even that TV could likely be sold for £50 from the Korean or Chinese factory it rolls out of. The rest is the ‘worthless’ value-added frippery that people decry.
The service sector can only employ so many people
A.k.a the ‘Britain only needs so many hairdressers’ argument.
This is basically a failure of the imagination. Many people don’t understand how a banker or an architect or a journalist adds value any more than a rural peasant in the 1700s understood what happened in an iron foundry.
Worse, they seem to think human civilisation has halted. They’d be the peasants crying out: “Britain only needs so many horseshoes!” without envisaging steamships or railroads.
The promoters of this line of thinking might also be surprised to hear that the service sector in Japan accounts for 75% of GDP. In Germany it’s 67.5%.
Clearly being a posterchild for manufacturing requires great hairdressing!
Britain was once the workshop of the world
This is nostalgia, pure and simple. As a human being I get the emotion, but it’s not relevant as to whether we should be the workshop of the world today.
Where to begin? Aside from the fact that making stuff isn’t great business, there’s also the fact that the sort of raw manufacturing China excels in is dangerous and polluting.
What about high-end manufacturing by smart new robots like we see in Japan and China? Yes, that’s more desirable – and happily it’s also manufacturing that we do here in the UK already.
Britain made 1.4 million cars in 2008. That’s down from the peak of nearly 1.7 million in 1997, but it’s more than we made in 1960 in the final hurrah for the Golden Age of Britain’s car industry [11].
Also, I hope everyone who is obsessed with us making stuff has shares in the likes of Goodwin, Rolls Royce, Rotork and Renishaw, among many others. Such companies may have factories abroad, but they also manufacture goods here in the UK.
China will win, because the Chinese work harder at real jobs
This is the uber-argument of pining-for-manufacturing lobbyists. They admire the strong back of the doughty Chinese laborer as he sweats under a blowtorch and plays his part in knocking out a £10 toaster.
Such blindly pro-manufacturing men – and they are always men, usually in their 50s and 60s and jaded with the world – may admire the Chinese, but they also fear them.
What will Britain do when China makes everything!
Firstly, the whole reason these countries have taken our manufacturing industry off us is because they are poorer than us. They’re not born with a love of riveting. They’ll simply work for less than we will – and not because we’re (all) lazy either, but because we’ve got much better paid service sector or high-end manufacturing jobs to be doing.
Secondly, even China is losing low-end manufacturing business [12] to the likes of Vietnam and Indonesia.
I’m not sure where the Manufacturing Is All Important lobby thinks this will end? Presumably with Bangladesh and Burkina Faso lording it up over the rest of us with their factories and stuff.
People are afraid of a world they don’t understand
I’ve tried not to be too superior-sounding above. I have family in former industrial areas of the UK, and I am well aware of the painful dislocation the economic shift of the past three decades has wrought.
There’s a frightened voice at the heart of all this noise about the manufacturing industry. People don’t understand the modern world. They don’t see how 27-year old traders on Wall Street can cause a global recession [13]. They don’t understand how everything in their house can be made abroad, and yet they are still apparently richer than the people making it.
You can tell them, as Tim Worstall does in his piece, that agriculture was once 80% of the UK economy, and that if things hadn’t changed they’d still be spending 14 hours in the field digging up turnips, but it’s no good. They have been taught the way the world worked in the past, and they are uncomprehending about the future.
However, my sensitivities only go so far. There’s simply no excuse for the well-paid office workers who frequent The Register’s forums to deny reality by posting kneejerk laments about manufacturing before heading over to read about the oh-so-inessential iPad on Engadget [14].
(I’m making a leap here and assuming that the 80-odd comments weren’t left by barely skilled factory workers who downed tools just long enough to find a computer to greasily peck out their two-pence worth on).
If people want to club together to buy a low-end industrial sweatshop in Asia, they’ll find they’re cheap and interchangeable. Pool your money guys, and knock yourselves out on an electric toothbrush assembly line of your own.
I’d rather buy shares in the likes of Apple, which sources and assembles cheap, off-the-shelf components in Asia – after adding $399 worth of ‘worthless’ magic to the package in Cupertino, California.