UK economy primed for manufacturing fight back

At a recent private briefing, hosted by Siemens Automation & Drives and attended by a number of leading manufacturers, the economist David Smith outlined his thesis that the crisis in the financial services sector and the fall in the value of the pound could lead to a long-awaited rebalancing of the UK economy back towards the manufacturing sector and away from services. “The combination of a financial services sector facing weaker growth; the falling value of the pound and a manufacturing sector which is naturally hedged by its reliance on a diverse range of markets, limiting exposure to the American economy and a UK consumer downturn, is already resulting in strong growth and excellent export figures for manufacturers,” Smith said. There was no known instance, he went on, of manufacturing in any country permanently reversing the natural decline that is associated over time with a bigger share for the service sector, but rules were made to be broken and it would be good if British manufacturers could break this one. Siemens Automation & Drives managing director Juergen Maier (pictured) welcomed Smith’s comments. “There is a very positive manufacturing story that is unfolding in the UK, which is based on investment in automation, efficiency and productivity improvements,” he said. “This should now be acting as a counterweight to the doom and gloom of the services sector. After all manufacturing still represents half of all British exports at £175 billion.” In a wide ranging speech, Smith also urged UK manufacturers to continue their efforts to increase efficiency and productivity and to look upon China and India as significant opportunities rather than a continuing threat. “How manufacturing rises to the efficiency challenge is a key question, particularly in an era when the UK will be looking for a bigger contribution from exports and credit will be tighter. Evidence suggests that British manufacturers are responding positively to the challenge from China and India, but the balance sheet remains firmly on the side of the Asian economies at this time.” His comments were echoed by Maier: “We are no longer competing merely on cost. The UK is leading the world in high value-added manufacturing which is highly prized by our export markets. There is growing evidence that many issues associated with low cost economies, such as quality, servicing and after-sales support are encouraging the return of some manufacturing to UK shores from low cost economies. We believe this trend is set to continue.”