New Communist Party of Britain
New Communist Party of Britain
adopted December 2015
Manufacturing is probably the most valuable sector to the British economy because of its contribution to exports, and the dependence on it of every other sector of the British economy such as transport, retail, banking and other financial services. Irrespective of its decline, manufacturing is still the most important sector in generating new wealth and is 25 per cent more important to the economy than the finance sector.
Manufacturing spawns a lot of other activities. The making of manufactured goods leads to factories being built, maintained and tooled, the goods need to be transported to retail outlets or exported, they need to be sold, bought, insured, fuelled and repaired by trained workers. The trained workers need good health and a thorough education all of which requires health workers and teachers. The money that is used to fund these activities circulates and is managed within the financial services sector whether it be the provision of vehicle insurance, loans, overdraft facilities, foreign exchange facilities or other banking activities such as looking after workers’ wages or pensions.
In 2013 the approximate Gross Value Added at basic prices (GVA) of the UK Non‑Financial Business Economy was over £1,000 billion representing the income generated, less the cost of goods and services used to create it. Production amounted to £223 billion, distribution £153 billion, construction £80 billion and Non‑Financial Services amounted to £554 billion. While the contribution of manufacturing to GDP has declined on paper, many of the services provided to manufacturing were once considered part of manufacturing, such as catering, cleaning, building services, security and computing etc are now allocated into different areas of the economy.
In contrast in 2011, the financial and insurance services contributed £125.4 billion in gross value added (GVA) to the UK economy, significantly less than manufacturing. In terms of jobs there are about 1.1 million employed in financial and insurance services and about 38 million elsewhere, so the spending power of those working outside of the financial and insurance services sector is significantly more.
The Office for National Statistics found that even though just eight per cent of jobs are in manufacturing, compared to 25 per cent in 1978, overall manufacturing output has actually increased.
The change in manufacturing output over the long term is determined primarily by changes between labour and capital. An increase in either of these tends to lead to an increase in output, manufacturing has increased output despite a fall in the number of jobs and without a significant increase in capital. This intensification of work has resulted in productivity growing by 2.8% on average per annum since 1948 — compared with 1.5% for the services industry. Though since the crisis of 2007 the rate of increase of productivity has slipped significantly.
The mounting loss of highly skilled engineering jobs and closure of world‑class engineering factories is resulting in a loss of skills which will be very hard to replace. There is also the lost opportunities to reduce workers' workload and improve work‑life balance.