The United Kingdom has a long history of manufacturing. The Industrial Revolution which marked a major turning point in global development began in this country. Almost every aspect of modern life was influenced in some way by the birth of modern business, born in the British manufacturing sector.
Although the manufacturing sector’s share of both employment and the UK's GDP has steadily fallen since the Second World War, OECD data shows that manufacturing output in terms of both production and value has steadily increased over the same period.
This week Make UK published our annual compendium of manufacturing facts and figures with Santander. As usual, an analysis of the sector over the last twelve months highlights just how integral its success continues to be to the health of the UK economy overall.
The figures provide an important reminder that we’re still one of the top ten biggest manufacturing nations and we want to see policy makers re-booting the industrial strategy, working with industry to help move UK manufacturing up the rankings.
The topline figures show that manufacturing, accounts for two thirds of overall R&D, 45% of exports, 15% of business investment and 2.7m high value jobs which are better paid than the economic average.
Beneath this topline, however, this years’ analysis could not be coming at a more timely point in the economic and political cycle as the critical importance of the UK agreeing a deal with the EU which avoids barriers to trade is laid bare. Whilst exploring new markets is of course vital we cannot avoid the geography which shows the value of trade with the bloc is worth more than twice that of the United States, with seven of the UK’s top export destinations being within the EU.
Whilst it is true, as the Brexiteers often point out, that the United States is the single biggest export market, worth £118.2bn, exports to the EU – which though comprising separate countries is itself a single market – amounts to more.
Indeed, to demonstrate the importance of our near neighbours as export markets for UK goods and related services, this country still sells more to Ireland (£38.3bn) than to China (£23.1bn). Clearly geography still matters in international trade. For UK manufacturers’ access to their biggest market remains a priority.
Broken down by sector the export picture of manufactured goods is dominated by Transport (25.5%) and Pharmaceuticals & Chemicals (17.9%) which highlight the importance of these high value added sectors to the success of UK industry overall, the aerospace and automotive sectors in particular.
The importance of these top two dominant exporting sectors is also reflected in contributions to business R&D where pharmaceuticals and chemicals and the transport sector accounted for almost 70% of the total spend between them.
The transport sector also led the way in export growth increasing by 7.4%, largely on the back of continued growth in aerospace, closely followed by food and drink which increased exports by 5.3%. By overall sector size, Food and Drink remains the single biggest sector contributing 15.1% of GVA, closely followed by transport (14.9%) and pharmaceuticals and chemicals (14.2%)
The analysis also smashes the myth that manufacturing jobs are solitary, poor, nasty, brutish, or short with the average salary in manufacturing 13% above the rest of the economy at £33,592, compared to £29,832 for the whole economy and way above the services sector at £29,014.
While the UK has a long history of proud manufacturing then next few short months could be as important as any for the future of the industry in this country. Our analysis makes clear the overwhelming importance of trade with our closest market and the need to avoid imposing any barriers which will make this more difficult.