Manufacturing decline proves emotive issue

Press, 11 June 1987, Page 34

Manufacturing decline proves emotive issue

By

EVA KALUZYNSKA

NZPA-ReuterLondon

Britain, cradle of the Industrial Revolution, is becoming a land of empty factories, economists say.

The decline of the: smokestack manufacturing industries of northern England, and unemployment in this old industrial heartland, proved emotive issues in the campaign for a June 11 British General Election.

By contrast, southern England prospers from London’s role as a global financial centre and what some call a second industrial revolution — the rise of hi-tech . informationbased industry and provision of services.

Prince Charles, heir to the Throne, recently lent his voice to a chorus of concern about British industry.

“I do believe we must try to encourage the manufacturing sector,” he told a business conference urging that British industry follow what he said was the United States lead

and work more closely, with academics to evolve new ideas.

A Reuter poll of several academics, whose chosen field is the study of industry and labour, found scant optimism that oldstyle manufacturing would rebound by much in the nation that gave the world the steam engine. “The country that'was once the workshop of the world is now in the grip of deindustrialisation. The waning strength of her manufacturing is relentlessly ground down by her superior competitors,” said Mr John Eatwell, a Cambridge University economist.

The question was whether the new service industries would plug the gap.

Britain, which until 1983 exported more goods than it imported, now relies on . North Sea oil and such services as banking, insurance and tourism to keep it out of the red. Since 1979, when the pro-business Conservative

Party took office, some two million people had lost manufacturing jobs, said Professor Richard Layard, of the London School of Economics. The decline of manufacturing jobs is happening faster in Britain than anywhere else in the West, said Professor Layard, a supporter of the centrist Social Democratic Party. In Britain, with an 11 per cent unemployment rate, only a quarter of all workers have jobs in manufacturing now, with more than half working in such services as banking, tourism, leisure, transport and retailing. British manufacturing firms produce about 10 per cent more than they did at the last election in 1983, but 3 per cent less than in 1979, when the Conservatives came to power.

Professor Geoffrey Maynard, of Reading University, said the Conservatives had cleared the way for a regeneration, by shaking out obsolete business.

Although he said productivity was on the rise, Professor Maynard believes it is too soon to say whether this approach is working. Mr Alan Hughes, of Cambridge University, echoed Prince Charles in saying the Government should join with industry and academics to target industries for expansion, as Japan has done in pinpointing computers, bio-technology and advanced industrial materials. Mr Bob Rowthom, also at Cambridge, said that the idea that services

could compensate for loss of manufacturing exports and dwindling North Sea oil revenues was “absolutely unconvincing.” Services just did not create as much wealth, he said.

His view has relevance for other advanced industrial nations including the United States that may look to service industries as a new economic “locomotive,” while leaving smokestack industry to newcomers like South Korea and Brazil. “All the evidence points to manufacturing growth being the key determinant of, the growth of the economy as a whole,” agreed' Mr Eatwell, of Cambridge. Mr Eatwell, who advises the Left-wing Labour Party, said services expanded on the back of manufacturing — "package holidays - involve planes, cars, boats, tennis rackets and so on.” But Professor Patrick Minford, of Liverpool University, said British industry "finally caught up with reality.” Manufacturing "is not going to be terribly important in future,” Professor Minford said. “Services had been and will continue to be much more •important in the United Kingdom, following a pattern the United States has experienced,” he said. Professor Alan Budd, of the London Business School, said that industry would continue to play a' major, if changing, role inthe British economy. He rejects “the deepseated idea that only widgets (nuts and bolts) are proper economic activity.”