Does the UK Need to Shake Off its Factory Fixation..... ?

Governments everywhere — even the UK — seem stuck in some kind of time loop, obsessed with factories as the recession recovery magic bullet. The accept logic seems to be that if a country vests money in industrial infrastructure, this will automatically create jobs and that will put a rocket up the arse of economic growth.

However this logic may be a little 20th century, which means by now no longer relevant!

I mean for starters, modern factories simply don't require that much hands-on labour! They are advanced, highly mechanized facilities where the machines do most of the work. The only work that remains tends to require specialized skills in engineering and technical maintenance — not the kind of work to absorb large numbers of untrained workers.

The facts support this. Since 2013, employment in factory work worldwide has declined by 6%, while factory production has risen by 5% in terms of value. This says something very important: manufacturing no longer multiplies employment the way it used to. Pursuing factory jobs is akin to attempting to revive coal mining — it's a nostalgic but unrealistic memory of the past.

Another myth governments hold on to is that reindustrialisation increases the security of a country. The COVID-19 pandemic taught us otherwise. It wasn't nations with big domestic manufacturing industries that fared best — it was nations with strong, robust supply chains. Versatility and global cooperation worked much better than staying on our own.

And then there's the argument that manufacturing is needed for national economic development. This one falls short as well upon closer inspection. India, for example, is experiencing strong economic growth without any corresponding increase in manufacturing. And China — so frequently cited as the nation to be followed — itself has been falling short of its own goals, even as it dominates the world in electric vehicle manufacturing.

So why do policymakers keep clinging to this factory fixation? Nostalgia and political appearances are part of it, maybe. A new factory rising is a tangible win — it looks good on TV and makes for a good sound bite. But the simply reality is that building factories probably isn't going to create mass employment!

For Britain I think it makes little sense to try and replicate China's state led industrial model of development, rather we should focus on supporting finance, pharmaceuticals, creatives and green tech, this stuff we already good at!

Posted Using INLEO