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The credit crunch crunches. Manufacturing to the rescue?

19 September 2008

By Paul Miller

Responding, strategically, to the economic conditions we are facing should be a fundamental theme for those attending the IED Conference in Liverpool next week.  Certainly, I propose to focus on it in the workshop I am running.  

The map here (created in G-View ) shows the position today – the unemployment data issued on 17th September.  The concentrations are alarming – all the usual suspects are there.  I suspect many in Yorkshire and Humberside will in particular be nervous about the HBOS fall out. What should be the response of those thinking about this?

Well a significant lesson is that all of us ‘up north’ (or far west) should be thankful that we’ve got a bit of manufacturing. The British economy saviour that has been financial services has been shown to be as brittle as any other sector. For us in the UK, this is a particular problem.  I hope all those with a manufacturing base will be shouting ‘remember us…we’re still here’.

In the long term, security derives from making THINGS. The US will bounce back more quickly than the UK because it still has a strong manufacturing base. We need to get that back and it is refreshing that BERR has recently announced a manufacturing initiative .

So what does this mean for those places on the map – manufacturing places all – where unemployment is on the rise?

Firstly, we have to recognise that economic development has largely ignored manufacturing over the last few years. Very few manufacturing industries would be defined as ‘knowledge based’ because the employment structure does not capture enough graduates. We really do have to ask ourselves if this distinction between those industries that are ‘knowledge based’ and those that are not, is helpful.  I wouldn’t want to be the one that tells the Chief Executive of a textile manufacturing business that hers is not ‘knowledge based’.

Secondly, we have to understand what makes manufacturing succesful. It’s much the same as any other industry.  Its access to innovation enabling organisatiions – universities with appropriate strengths, software development and networks that work.

Above all, we have to research manufacturing as though we mean it.  Manufacturing is the most complex of sectors. It is not understood only from data – although it’s remarkable how far we can get with it.  We need to talk to the businesses, understand their markets and what makes where they are located – in Yorkshire or Lancashire or Cleveland – so good for them (or bad).

Only then will the ‘hit’ our country is taking on financial services matter a bit less because we’ll have a stronger manufacturing base to balance it out.

Permalink: http://www.gavurin.com/crunch (copy'n'paste)

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