Gordon Brown pledged the Government to remain committed to a strong British manufacturing sector, while acknowledging that the closure of MG Rover had been a "devastating blow".
He also took the occasion of a speech to the Amicus union to deliver a tough message to unions on pay and working hours. The Chancellor called for "wage discipline" in the public sector and restated the Government's determination to overturn last week's European Parliament vote to impose a maximum 48-hour working week in the UK.
There was no strategy to replace manufacturing jobs with service sector work, he insisted.
Mr Brown was speaking on the day that National Statistics reported that the growth in average earnings had eased unexpectedly.
In the three months to March the year-on-year increase dipped to 4.6 per cent from 4.7 per cent in the three months to February.
Not counting bonuses, the increase fell from 4.3 per cent to 4.1 per cent, the smallest for a year. NS attributed to decline to fewer high-paid staff in the National Health Service and less manufacturing overtime.
Underscoring his commitment to manufacturing, Mr Brown pointed to figures showing that manufacturing exports increased by 5.2 per cent in the first few months of this year, while manufacturing productivity rose by 3.8 per cent in the last quarter of 2004.
Manufacturing's share in the UK economy was larger than in the US, where three million manufacturing jobs have been lost, he said. "Let us remember when some are pessimistic, I am not," he told the Amicus delegates.
Faced with growing competition from China and India, high-skilled, high-tech modern manufacturing was still "what Britain does best", he declared.
He pointed to a range of Government initiatives to support modern manufacturing businesses, including an annual £1.2 billion tax credit for research and
development, extra investment of £1 billion in science and the creation of a new manufacturing advisory service.
"I say to you today, 'Let no one think that manufacturing will be allowed to be a sector of the past, to be praised for its historic role, but somehow not relevant to the future'," he said.
"For this Government, manufacturing not only has been, but remains and will always be, critical to the success of the British economy.
"Vital for employment, employing
3.5 million people. Vital for growth, accounting for a sixth of our national output. Vital for trade, accounting for 55 per cent of our exports.
"Vital to innovation, accounting for most of the scientific developments applied to business in our country. Vital to every major region and nation of this country - whole economies dependent upon manufacturing.
"And vital because it is the wealth from manufacturing that finances the public services we have."
Amicus general secretary Derek Simpson said: "Amicus will continue to campaign for the removal of the opt-out of the 48-hour week."