Will Chancellor Osborne cripple the ‘makers’?

george osborneChancellor George Osborne closed his 2011 Budget speech by setting out his aspiration for “a Britain carried aloft by the march of the makers”.

In 2014, the Boston Consulting Group described UK manufacturing as a “rising regional star” in terms of the competitiveness of national manufacturing – despite setbacks, notably to steel producers, which could damage other areas of the economy. Mr Osborne please note.

Sukand Ramachandran sees moderate wage increases, offset by productivity gains and the UK’s direct-manufacturing cost structure improved by up to 10 percentage points relative to other leading Western European manufacturing export economies, according to the BCG Global Manufacturing Cost-Competitiveness Index:

“The UK has also improved its competitive position compared with Eastern European nations such as Poland and the Czech Republic, as well as with Asian economies such as China. As a result, manufacturers of everything from toy trains to fashion garments are reshoring production. In a recent Manufacturing Advisory Service survey, 11% of small and midsize manufacturers in the UK said they had brought production back from overseas in the previous 12 months—twice as many as said they were shipping work abroad”.

Mr Ramachandran recognises the strong advanced manufacturing ecosystems in the Midlands (engineering and components suppliers), Oxfordshire (automobiles), Bristol (aerospace), East London and Warwickshire for high-tech manufacturing.

But late last year it was quietly announced that the Business Growth Service, including the Manufacturing Advisory Service and the Growth Accelerator programme, is being closed down.

Should Osborne’s MAS decision be added to Luke Landes list of Pennywise – pound foolish actions?

david bailey 5It is said that the closure will ‘save the Government £84 million’, but Professor David Bailey (Aston Business School), who has written two articles in the Birmingham Post about this decision, pointed out that its substitute – an investment of £12 million per year into 39 local growth hubs led by local enterprise partnerships – is “peanuts”. He describes the BIS suggestion that MAS will effectively be replaced by local growth hubs as misleading:

  • “For a start, the £12 million across 39 LEPs works out at just over £300,000 a LEP. Peanuts.
  • “Secondly, while LEPs here in the West Midlands have prioritised manufacturing as one of their key sectors as part of their strategic plans. What about those LEPs that don’t prioritise manufacturing? In such cases, local growth hubs are unlikely to offer much support – if any – to manufacturing firms.
  • “Thirdly, the growth hubs are simply unready in many cases to take on the mantle”.

Professor Bailey says that the closure of MAS raises wider questions about the Government’s commitment to using industrial policy to support manufacturing, noting that ‘there’s effectively been radio silence from the BIS Secretary Sajid Javid since he came into office in May’.

He ends: “If the government was trying to end parts of the Business Growth Service that can now be delivered by professional consultants, then that might make sense. But in ending the whole service, the Government has effectively scrapped a range of unique expertise on manufacturing improvement that was highly valued and trusted by industry as impartial. ‘Throwing the baby out with the bathwater’ is the phrase that several industry experts have used.

“The Government needs to rethink this ill thought out decision”.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: