Potential rebuilding of industries in the UK post COVID-19 epidemic.

[yorksrob]

Mod note - Split from this thread:

Reliance on this Covid-19 vaccine

Is anyone else concerned about the fact that the government (and a lot of the general public) seems to be assuming there will be a vaccine for this disease. The reality is we might never have a vaccine after all there are no vaccines against other Coronavirus’s. I feel we should be saying if...

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Maybe the virus will be a kick in the backside for globalism and we'll start making more of our own things. Well, one can hope.

It's noticable that countries which have maintained significant manufacturing capability have been ahead in many aspects of this crisis, be it PPE, medical diagnostics chemicals etc. That's a lesson that needs to be learned.

They will be ahead in the economic recovery as well (as they always are with economic shocks).

 

[bramling]

It's noticable that countries which have maintained significant manufacturing capability have been ahead in many aspects of this crisis, be it PPE, medical diagnostics chemicals etc. That's a lesson that needs to be learned.

They will be ahead in the economic recovery as well (as they always are with economic shocks).

Yes we really should be endeavouring to get quality manufacturing capability back. We should never have lost it in the first place.

 

[JonathanH]

Yes we really should be endeavouring to get quality manufacturing capability back. We should never have lost it in the first place.

While I agree, it would be a good start if people bought things from the existing UK manufacturers to prove the market. Everyone is addicted to cheaper goods from the rest of the world, a situation which has been growing for the last fifty years or more.

I suspect that even if we were to be able to come up with a vaccine, once up to full production, it will mainly be produced abroad.

 

[Chester1]

Yes we really should be endeavouring to get quality manufacturing capability back. We should never have lost it in the first place.

Quality being the key word. Simple stuff should be imported and high quality stuff exported. Those wishing for a return to the days of mass employment in manufacturing will be disappointed. Manufacturing in developed countries produces are higher % of GDP than % of labour market. The maximum the UK could manage would be doubling to about 25% of GDP. Pharmaceuticals in an area that the country should invest in. We are big in its research but not production.

 

[Bantamzen]

I've seen reports that preparations are being made for mass production of the Oxford vaccine as soon as (and maybe even before) it is shown to be effective. Something called "Operation Warp Speed" seems to be doing the same in the US, although that may be just a figment of Trump's "warped" imagination. The risk of having to bin a few million doses if it turns out not to work is probably worth the reward of getting the economy back up and running earlier than otherwise.

I think "Operation Warp Speed" is the product of Trump's "experts" he's brought into the White House from Fox News. Mass producing a vaccine that you then have to dump won't look good, and won't be good for any economy.

Maybe the virus will be a kick in the backside for globalism and we'll start making more of our own things. Well, one can hope.

It won't be. Put simply to dial back our industry would take decades and would still have to compete with other markets. The Little Britain-ism that seems to have emerged during this crisis ignores the reality that globalism is here to stay. What we need to be is an innovator, not just a competitor to other economies with much lower wages.

It's noticable that countries which have maintained significant manufacturing capability have been ahead in many aspects of this crisis, be it PPE, medical diagnostics chemicals etc. That's a lesson that needs to be learned.

They will be ahead in the economic recovery as well (as they always are with economic shocks).

That I am afraid is the stark reality, and isn't going to change.

But would you be mortified if you gave them infuenza ? you stand just as much chance of passing away with 'the flu' too, if you have the 'underlying health issues', and many ilnesses do not have a vaccine, even the flu jab is only partial.

Indeed, people seem to have forgotten that there are many bacterial & viral strains out there that pass from human to human that could cause someone's death. We need to move swiftly away from the notion that we might be killing others by just going about our usual business, otherwise the fabric of society will unravel all too quickly.

 

[yorksrob]

It won't be. Put simply to dial back our industry would take decades and would still have to compete with other markets. The Little Britain-ism that seems to have emerged during this crisis ignores the reality that globalism is here to stay. What we need to be is an innovator, not just a competitor to other economies with much lower wages.



That I am afraid is the stark reality, and isn't going to change.

There is only a limited use in being an innovator if you cannot then capitalise on that innovation by producing it.

How many times have we seen a good product or business developed in this country be swallowed up by some foreign multinational. Other countries don't stand for it and neither do we have to, in spite of what the free-marketeers have been peddling for the past forty years.

It took decades to willfully destroy the countries manufacturing capability. If it's going to take decades to undo the damage, best start now.

 

[JonathanP]

There is only a limited use in being an innovator if you cannot then capitalise on that innovation by producing it.

True, but you have then gone on to make the unwritten, false assumption that "production" means doing the production yourself in local factories. In the modern world this is no longer necessary.

The world's most valuable and profitable company, Apple, is successful because it both innovates and produces, but almost all it's physical production is outsourced to Foxconn in China.

How many times have we seen a good product or business developed in this country be swallowed up by some foreign multinational. Other countries don't stand for it and neither do we have to, in spite of what the free-marketeers have been peddling for the past forty years.

Again, I would agree with this, but it has nothing to do with local manufacturing capability.

 

[yorksrob]

True, but you have then gone on to make the unwritten, false assumption that "production" means doing the production yourself in local factories. In the modern world this is no longer necessary.

The world's most valuable and profitable company, Apple, is successful because it both innovates and produces, but almost all it's physical production is outsourced to Foxconn in China.



Again, I would agree with this, but it has nothing to do with local manufacturing capability.

Actually, the current situation has illustrated that it does make a difference. Even before the current situation, countries such as Germany which have maintained a substantial manufacturing base, do better economically. Off-shoreing everything isn't the panacea we've been led to believe.

Apple is an interesting case study. One of the most successful companies in the world. How much of that wealth filters down to American workers. Are average wages in America rising or falling.

 

[Bantamzen]

There is only a limited use in being an innovator if you cannot then capitalise on that innovation by producing it.

How many times have we seen a good product or business developed in this country be swallowed up by some foreign multinational. Other countries don't stand for it and neither do we have to, in spite of what the free-marketeers have been peddling for the past forty years.

It took decades to willfully destroy the countries manufacturing capability. If it's going to take decades to undo the damage, best start now.

Unfortunately we are no longer in a position to compete with current manufacturing against economies like China, India & even the US. We could however look to innovate in new technology, particularly in the green energy area.

 

[yorksrob]

Unfortunately we are no longer in a position to compete with current manufacturing against economies like China, India & even the US. We could however look to innovate in new technology, particularly in the green energy area.

Or we could look at developing industry in a less carbon intensive way.

 

[ABB125]

What would be the effect of legislation which, for example, forced the NHS to only buy stuff made in Britain by British companies which only pay British taxes? Whilst the cost may be higher, it's better for the environment (due to much reduced transportation distance, and not being made in China using coal-fired electricity) and would grow the economy. The question is, is the increased cost matched by the economic growth.

 

[yorksrob]

What would be the effect of legislation which, for example, forced the NHS to only buy stuff made in Britain by British companies which only pay British taxes? Whilst the cost may be higher, it's better for the environment (due to much reduced transportation distance, and not being made in China using coal-fired electricity) and would grow the economy. The question is, is the increased cost matched by the economic growth.

Crudely speaking, it might cost more to buy something manufactured here. However, that cost, minus the cost of any raw materials imported to manufacture the item, is available to be spent all over again in the British economy by the manufacturing company and its employees. Conversely, it might cost less to import something from abroad, but that money spent is now elsewhere.

Generally, if you manufacture something here, the cost is high, but a small proportion of the cost will go on raw materials. More would likely be on labour.

 

[RT4038]

Crudely speaking, it might cost more to buy something manufactured here. However, that cost, minus the cost of any raw materials imported to manufacture the item, is available to be spent all over again in the British economy by the manufacturing company and its employees. Conversely, it might cost less to import something from abroad, but that money spent is now elsewhere.

Generally, if you manufacture something here, the cost is high, but a small proportion of the cost will go on raw materials. More would likely be on labour.

So the effect of such legislation would be to increase the cost of the NHS, or more likely to reduce the amount of service the NHS could give wiuthin their current budget.
We could go back to manufacturing lots ourselves (as we did in the 1970s and before), but it would mean a return to 1970s prosperity.

 

[yorksrob]

So the effect of such legislation would be to increase the cost of the NHS, or more likely to reduce the amount of service the NHS could give wiuthin their current budget.
We could go back to manufacturing lots ourselves (as we did in the 1970s and before), but it would mean a return to 1970s prosperity.

It would increase the cost to the NHS, but more of that cost would more find its way back into the pocket of taxpayers to be spent and taxed.

Germany has a large band of medium sized manufacturers and they haven't returned to 1070's levels of prosperity.

 

[LNW-GW Joint]

Apple is an interesting case study. One of the most successful companies in the world. How much of that wealth filters down to American workers. Are average wages in America rising or falling.

Some of Apple's wealth reaches the UK because of the licensing of ARM designs.
ARM is a UK company with an HQ in Cambridge despite being now owned in Japan.
That's great value for the UK from its native IPR without any major manufacturing involved.

Having manufacturing without the IPR (which is what the current UK railway works pretty much are) doesn't get you anywhere for the future.
Our railway IPR at the end of BR was worth very little, especially with the sale of BREL to ABB and of the GEC interest in railways to Alstom.

 

[yorksrob]

Some of Apple's wealth reaches the UK because of the licensing of ARM designs.
ARM is a UK company with an HQ in Cambridge despite being now owned in Japan.
That's great value for the UK from its native IPR without any major manufacturing involved.

Having manufacturing without the IPR (which is what the current UK railway works pretty much are) doesn't get you anywhere for the future.
Our railway IPR at the end of BR was worth very little, especially with the sale of BREL to ABB and of the GEC interest in railways to Alstom.

I'm not saying that you don't need IPR. Not at all. You need both.

 

[RT4038]

It would increase the cost to the NHS, but more of that cost would more find its way back into the pocket of taxpayers to be spent and taxed.

Germany has a large band of medium sized manufacturers and they haven't returned to 1070's levels of prosperity.

We are not Germany. In the 1970s their prosperity was already a lot better than us.

 

[yorksrob]

We are not Germany. In the 1970s their prosperity was already a lot better than us.

That's precisely the problem. We should be aiming to emulate Germany, not try and be some bargain basement "everything for sale" shadow economy where you try and buy everything in. That's the reason why we're not like Germany.

 

[RT4038]

That's precisely the problem. We should be aiming to emulate Germany, not try and be some bargain basement "everything for sale" shadow economy where you try and buy everything in. That's the reason why we're not like Germany.

You may well be right, but changing that is not going to happen (at least in the short to medium term), because we are not Germans and not in Germany. So, the effect of manufacturing quantity stuff in the UK would be a return to 1970s prosperity. Before the Covid-19 crisis our productivity was one of the worst in Europe.....

 

[yorksrob]

You may well be right, but changing that is not going to happen (at least in the short to medium term), because we are not Germans and not in Germany. So, the effect of manufacturing quantity stuff in the UK would be a return to 1970s prosperity. Before the Covid-19 crisis our productivity was one of the worst in Europe.....

The productivity conundrum has been often debated.

One of the reasons we have low productivity is that we have lots of people working in low yielding service industries. If we invested in high output manufacturing with a high output per employee, productivity would go up. Companies would need to have the confidence to invest though. What would provide that ? Something like a good long term supply deal to the NHS for example.

 

[Harold Hill]

We could however look to innovate in new technology, particularly in the green energy area.

The green thing?? Michael Moore destroyed the whole green energy paradigm last week

 

[JonathanH]

We could however look to innovate in new technology, particularly in the green energy area.

The green thing?? Michael Moore destroyed the whole green energy paradigm last week

Clearly using less energy overall is better than simply changing the way it is produced - that is obvious - a green energy strategy could also focus on efficiency of using energy. We have a long way to go on this.

Exactly the point than can be made on battery technology - we are plundering the world for lithium thinking it is 'green'.

 

[ABB125]

I'm slightly confused as to why returning to 1970s levels of industry would automatically mean 1970s prosperity? Surely simple planning could avoid this?

 

[RT4038]

The productivity conundrum has been often debated.

One of the reasons we have low productivity is that we have lots of people working in low yielding service industries. If we invested in high output manufacturing with a high output per employee, productivity would go up. Companies would need to have the confidence to invest though. What would provide that ? Something like a good long term supply deal to the NHS for example.

This is Britain, not Germany. Until we change our society to get away from the fundamental power struggle between labour and capital, without the threat of competition (which could only come Internationally, which is barred) a cosy long term supply deal will likely result in interrupted supply, inflated costs and shoddy products. This in turn will cause the NHS to look elsewhere, with justification I think. Just the sort of thing we had in the 1970s, and still do in the rail industry.
A lot needs to change to get to where you are suggesting, and I'm not sure we would be up for it.

 

[RT4038]

I'm slightly confused as to why returning to 1970s levels of industry would automatically mean 1970s prosperity? Surely simple planning could avoid this?

It is not so much the planning, but that our difference in prosperity from the 1970s to now is mainly because we are importing goods produced by much cheaper labour. If UK labour was used (as it was last in the 1970s), therefore much higher rates, prices for goods and services would rise and our prosperity would decline. If not, we would be making it here already!

 

[yorksrob]

This is Britain, not Germany. Until we change our society to get away from the fundamental power struggle between labour and capital, without the threat of competition (which could only come Internationally, which is barred) a cosy long term supply deal will likely result in interrupted supply, inflated costs and shoddy products. This in turn will cause the NHS to look elsewhere, with justification I think. Just the sort of thing we had in the 1970s, and still do in the rail industry.
A lot needs to change to get to where you are suggesting, and I'm not sure we would be up for it.

There isn't a fundamental power struggle between labour and capital, in Germany or here. This isn't the 1970's. This narrative that Germany is some fundamentally different type of society is nonsense. Always going for the rock bottom price results in shoddy products.

Increasing productivity means increasing output per worker. High output manufacturing can do that, as well as providing economic and wider societal (in terms of ensuring supply chains during crises) security.

 

[yorksrob]

It is not so much the planning, but that our difference in prosperity from the 1970s to now is mainly because we are importing goods produced by much cheaper labour. If UK labour was used (as it was last in the 1970s), therefore much higher rates, prices for goods and services would rise and our prosperity would decline. If not, we would be making it here already!

There is no fundamental difference between a UK worker and a German worker. If your theory were correct, Germany would be paying much higher rates for goods and their prosperity would decline. It clearly hasn't.

 

[RT4038]

There isn't a fundamental power struggle between labour and capital, in Germany or here. This isn't the 1970's. This narrative that Germany is some fundamentally different type of society is nonsense. Always going for the rock bottom price results in shoddy products.

Increasing productivity means increasing output per worker. High output manufacturing can do that, as well as providing economic and wider societal (in terms of ensuring supply chains during crises) security.

If that were true, we would be doing it now.

 

[lyndhurst25]

In many British firms, workers and management still have a "them and us" mentality, maybe a throwback to the British class system, rather than the 1970s? In Europe companies are more often run by cooperation between workers and management, with workers involved in decision making, owning shares in the company and there being a smaller pay gap between those at the bottom and those at the top. German companies can raise capital from regional banks, regional government and regional stock exchanges, rather than via the City as in the U.K. We British should have learnt a lot from the way things are done abroad in the 40+ years that we were in the EU, but we didn't and I can't see that changing any time soon.

 

[yorksrob]

If that were true, we would be doing it now.

No, we don't do it now because we go for whatever is cheapest, and to hell with the wider economy, or indeed the security of supply.