We no longer make things, manufacturing is in total decline, and our future lies in the service sector. Wrong, wrong, wrong.
It’s time to put some of these myths to rest. But it’s also a chance to face up to some real problems we have in Birmingham and the West Midlands.
Let’s be clear, we do still make things, it’s just that we no longer make the kind of things we used to make and manufacturing processes have changed, too.
Some 40,000 people were employed in manufacturing in Birmingham in 2012. That’s one in 12 of the workforce. This is a lower proportion than in the West Midlands as a whole, where one in 8 work in manufacturing and even slightly lower than the UK average – but it’s nevertheless a significant source of employment and wealth creation for the city.
In money terms manufacturing output contributed £2 billion [or 10 per cent] to the Birmingham economy and in the West Midlands manufacturing accounted for £13 billion or 14 per cent of the economy.
In the past two decades manufacturing’s share of the economy has fallen from 20 per cent to 10 per cent and there is an agreed consensus nationally that the economy needs to be rebalanced in favour of manufacturing.
Gone have the days of high wage, low skill, mass production lines; we will have to concentrate on high quality, high value advanced manufacturing. That requires a properly trained work force and investment in research.
Manufacturing employment is highest in the East Midlands and we have been pushed into third place. We need consistent levels of funding as well as greater co-ordination between government, local authorities and companies. The one thing areas with a deeper manufacturing base have in common is long term strategic investment in people and ideas.
In the 1950s Birmingham was second only to London for the creation of new jobs; unemployment rarely exceeded one per cent and in 1961 household incomes in the then West Midland County were 13 per cent above the national average, exceeding even London and the South East.
Today, Birmingham is the most deprived local authority in England in terms of income and employment deprivation.
The city creates jobs, but many of the higher skilled jobs generated go to commuters from the surrounding area. We have outstanding universities and schools, but Birmingham’s NVQ results at every level are below the West Midlands as well as below the national percentages. Birmingham may be the most visited retail destination outside London, have the greatest number of foreign languages spoken apart from the capital, but this isn’t enough to sustain a resilient local and regional economy.
It is good that 70 per cent of UK business research and development goes into the manufacturing sector but manufacturing business investment has fallen in real terms and as a share of the total.
This matters because we are a trading nation. Manufactured goods contribute a disproportionate share of total exports compared with their share of national output – in 2011 it was 46 per cent, however the UK imports far more manufactured goods than it exports.
The “Birmingham – we still make things” Day at Westminster shows examples of the kind of world class supply chain manufacturing which will give the city and the region the economic success and resilience we are looking for.
It is significant that on the day Andy Street from the Greater Birmingham and Solihull LEP and Stewart Towe from the Black Country LEP will be joined by Sir Albert Bore the leader of Birmingham City Council.
In Manchester they talk about Greater Manchester and Lancashire does not feel threatened by this. Equally, Yorkshire has not been diminished by a Greater Sheffield.
The leaders of Birmingham, Coventry, Wolverhampton, Dudley, Sandwell, Solihull and Walsall will find that if they too come together, as part of a Greater Birmingham family, we too will be able to pool our resources and make the long term strategic decisions needed. And just maybe, a city region administered by a directly elected executive mayor is the answer to maintain the entrepreneurial manufacturing spirit of the region.
Gisela Stuart MP