Letter: Making the best of the decline in manufacturing

Sir: We are gratified by the number of letters provoked by Hamish McRae's account ('Manufacturing, who needs it anyway?', 18 November) of our Amex Prize essay, 'Is Manufacturing Still Special in the New World Order?' Our answer is no: manufacturing is no more the 'base' of modern economies than is agriculture. Manufacturing is no longer a net job creator; it is not the fastest-

growing part of demand or world trade; nor is it the dominant source of leading-edge technology. Today, and even more so in the future, those epithets belong to services.

We agree with Mr Monks (20 November) that all sectors of the economy create wealth and are interdependent. We also believe that manufacturing in Europe can be competitive in high value-added and customised products. But traditional manufacturing - the mass-production factories churning out homogeneous goods and employing thousands of semi- skilled workers - will increasingly migrate to the developing countries. This trend is too powerful to be reversed, short of heavy- handed protectionism.

The resulting shift away from manufacturing jobs is already evident in all major industrial countries - not just Britain. Despite very different government policies, education systems and social support levels, the number of manufacturing jobs peaked in Germany in 1960, in Japan in 1973, in France in 1974 and in the United States in 1979.

To argue that the trend in Britain can be reversed by some change in government policy ignores international experience. That is why Mr Monks's call for 'a larger manufacturing sector', Mr Radcliffe's (20 November) concern that 'if we lost our manufacturing base, we would lose control of our destiny', and Professor Pick's (22 November) worry that the UK cannot 'ensure adequate and safe external supplies of these goods' are not only outdated but potentially damaging. A government that targets its support on the manufacturing industries of the past by the same stroke penalises the job-creating industries of the future.

However, we share the concerns of Mr Duff (20 November) that manual workers will find the change both most necessary and most difficult. The Government has a key role to play in building up the skills base of the economy so that workers, including those displaced from the declining manufacturing sectors, can bid for the high-wage jobs of the future.

It must also press the developing countries to open up their markets to foreign producers and investors. But all this has to be done without prejudice to any one economic sector. Several other important points were raised in the excellent letters, including the case for helping regions hard hit by structural change and the likely unevenness of job distribution at a time of rapid technological change. We believe it is these sorts of issues which should now be addressed, and not the sterile 'manufacturing vs services' debate.

Yours faithfully,

DeANNE JULIUS

(Chief Economist, British Airways)

RICHARD BROWN

(Visiting Fellow, Manchester

Business School)

Fetcham, Surrey

24 November