‘Manufacturers need tax breaks’
SELL-offs, foreign ownership and ‘inept privatisation’ have broken supply chains and left British manufacturing dominated by small firms vulnerable to overseas investment decisions.
That’s according to research by The University of Manchester based ESRC Centre for Socio-Cultural Change (CRESC) which says the sector is also being held back by foreign owners which have ‘limited amibitions’ for their UK-based subsidiaries.
One third of UK manufacturing jobs are now in foreign-owned companies. The number of factories with more than 200 employees has halved over the past 25 years, so that the UK now has no more than 2,000 factories employing more than 200 workers, says the report.
British owned firms employ an average of 14 workers and are mainly too small to export their goods, say the researchers. In 2008 manufacturing accounted for 13.2% of the North West economy, down from 14.6% in 1989.
One of the repprt’s authors, Sukhdev Johal, said: “The measure of the problem is the JCB digger. This is an exceptional story of product success for a British-owned engineering firm but the company cannot source more than 36% of their digger by value from the UK.
“If we look more broadly across engineering, half of intermediate purchases are imported by UK manufacturers, compared with one third in Germany. Unless we fix this problem, the benefits of any renaissance of British manufacturing will leak abroad to mainly West European suppliers.”
Prof Karel Williams from The University of Manchester said: “The Coalition government, like its New Labour predecessor, has high hopes for well managed British firms in sunrise high tech manufacturing.
“But that doesn’t engage with the problems about the fragmented networks of small firms which dominate UK manufacturing.”
The CRESC report proposes a new policy approach of tax incentives for manufacturing firms to increase output, invest in capacity and skill-up their workforce.
