Manufacturing .. Do We Need It ?

[LoneWolf]

The decline of manufacturing in the Island is a fact.

The shoe factory has disappeared, Castle Industries is about to disappear, Ronaldsway Aircraft Co no longer employ a huge workforce and there are other examples.

The question is .. does the Island need manufacturing.

Is a million pounds worth of service industry output the same as a million pounds worth of manufacturing output ? I think it is and also think it makes little difference if we maintain a manufacturing sector or not always provided we can replace its output with an equal or greater amount from the services.

Its an election year and maybe we should be asking why manufacturing companies continue to be gifted grants to establish when perhaps the money could be put to better use.

[germann]

Putting all our eggs in one basket is indeed dangerous. But if a new factory opened on the island with vacancies for, say, 200 unskilled/semi-skilled workers, how many applicants for those jobs would be iom workers willing to work for a minimum hourly wage?

 

Not many I think.

[GD4ELI]

Putting all our eggs in one basket is indeed dangerous. But if a new factory opened on the island with vacancies for, say, 200 unskilled/semi-skilled workers, how many applicants for those jobs would be iom workers willing to work for a minimum hourly wage?

 

Not many I think.

Agreed. I don't see how IOM manufacturing of this type could compete with eastern Europe or China.

 

However - don't forget industries such as computer software which can be a high income earner per head of workforce. There are quite a few one-man bands on the Island doing quite nicely.

[Rog]

There is a need for an economy that has employment possibilities for as many people as possible.

 

The person who is paid to “pick and place” on a production line as it’s less expensive to employ someone that invest in a machine tool to do the same job will in all probability be unable to get work in the finance sector or even the service sector that supports it.

 

There is a need for a government to provide employment for the whole population. Some people can be trained or retrained but you can’t train intelligence into a person.

 

The less intelligent should be considered and more to the point catered for in long term strategic business planning.

 

Of course that assumes a decent caring government, one that doesn’t consist of a number of people with little beyond their own interests and the interests of their friends and associates at heart, and the existence OF a long term strategic business plan.

 

One place to start would be an effective and enforced work permit scheme -----.

[manxman8180]

Is a million pounds worth of service industry output the same as a million pounds worth of manufacturing output ?

I am sure an economist would provide you with a very long and detailed answer to this question. But, in short the answer is No.

 

Manufacturing is one of the few industries which actually creates 'wealth' for an economy. In general, service industries just re-cycle money which already exists within the economy. Of course, on the Island that isn't quite as accurate as other areas, as many of the services draw money from other jurisdictions. So whilst still recycling 'wealth' it also generates additional income for the GDP of the Island. But not to the extent of Manufacturing.

 

Yes we have seen some high profile redundancies in the last few years. But, reallistically, we were never going to be able to compete for those type of very low-skilled jobs. And frankly, we shouldn't be trying to. However, there are also some shining success stories, such as Smiths, Manx Engineers etc. Even Ronaldsway Aircraft, whilst maybe not employing a 'huge' workforce, have established a successful niche market for themselves, that has ensured they maintain viability in a very copmpetitive field.

 

Manufacturing employs more peope than banking on the Island. The average wage in Manufacturing is higher than that in banking. So please consider everything before you decide to do away with this industry.

 

There will always be certain parts of the industry that will never end up in China. High precision engineering requiring high skill levels, the majority of aircraft engineering, work for the space industry and of course anything remotely connected with the military will never end up that far east. These are the areas in which the local industry can remain competitive.

 

Additionally, as the rate of employment increases in these countires, naturally the wages will start to increase in order to attract the right workers. As this happens, the competitive edge which they currently enjoy will start to diminish.

[Lawnmower]

Manufacturing is essential to the Island.

 

It provides 3000 jobs here, and is second only to banking in income generation. In addition, the averagepay in the manufacturing sector is higher than in the Financial Sector - and the work still here is mostly of the high quality. Young people should genuinely consider it as an attractive option for work.

 

Only the menial and less skilled jobs are going to Ch9ina.

 

Go the the Opportunites exhibition at the Nunnery this weekend, third floor and find out all about it.

 

Or ask for a tour of Dowtys, Swagelock or Ronaldsway and have your eyes truly opened.

 

We need work other than service (parasitical) industry.

 

A society that makes nothing is doomed to die.

 

Sorry Manxman8180 - just read your post and you put it better.

[thebees]

This is something that 'troubles me' in general.

 

Without going on and on about China/capitalism/consumer society/expolitation & other Bee gripes I will tell you 2 stories.

 

1. One of our customers wants some sand paper, we call our UK supplier, 13 week lead time....on sand paper?? oh yes because it has to come from China. The UK manufacturers have closed.

 

2. I go into Monsoon to buy a dress I quite liked the look of, £130.00 kerching! how much? Mr Bee would be most unhappy at such a silly purchase, & there are 5 more exactly the same on the shelf and it was made in China. Waited a few weeks...the dress was in the sale for £35.00, they aren't likely to be selling it at a loss so where do they get off at making at least £95.00 on one dress?

 

It isnt just the Isle of Man that is suffering at the hands of the capitalist demons, production factories are closing all over the UK and as we strive to get the best deal for our consumer goods, mr fat cat is laughing all the way to the bank. We might pay £1.10 for a loaf of bread but at least the people at Ramsey Bakery and Laxey Flour Mills have jobs, to earn wages (& pay tax, NI etc) to pay for thier childrens upbringing & educational needs....what about the 25p loaf from Tescos?

[pontiuspilot]

Financial services does not have an output as such, just happy investors.

the effect of it is jobs and from the government point of view another way of raising tax.

I agree with the guy above we should not rely on one source of income for the IOM.

If and when the finance sector takes a wobble or even packs up and leaves, then we would be in the same situation we were in after the tourist industry died. Thankfully some forward thinking people put in the mechanism for the finance sector we have today.

Promoting any source of jobs that we can is only good for us, as Darwin said it's the fittest who survive.

we don't know yet what the fittest thing might be in the future, but if we have it here now then we can nurture it when the time comes. It is through diversity of types that life can survive in times of change, the same is true for the economic welfare of the IOM.

[pontiuspilot]

and another thing there is an arm of a very successful Btech company over here making very high value products for the pharmaceutical industry, this employs highly trained scientist and other technicians, yet another example of the diversity of activities going on on this rock.

[manxchatterbox]

not to forget CVI Optics in Onchan making specialist lenses etc some of which are used in high energy high altitude laser systems....

[LoneWolf]

Is a million pounds worth of service industry output the same as a million pounds worth of manufacturing output ?

I am sure an economist would provide you with a very long and detailed answer to this question. But, in short the answer is No.

Just a quick clarification on this one Manxman. In a free market economy its Trade which determines the value of an economy. On that basis it makes little or no difference if Trade is generated by manufacturing activities or by service type activities.

 

Manufacturing is one of the few industries which actually creates 'wealth' for an economy. In general, service industries just re-cycle money which already exists within the economy.

Not the case these days and hasnt been the case for quite some time. The emergence of a truly global economy has positioned services just as likely to generate Trade as is Manufacturing.

Spend a year or two on the prompt desk and you will witness first hand the continuing decline in traded commodities for manufacturing in the UK area. [its decline has been dramatic]

There is a reason for this. Those high value products we hear so much about often turn out not to be such high value as we thought. Otherwise their manufacturing location would remain right here in the UK area.

I would argue, if we really need manufacturing, then the market itself will ensure it survives.

My point being, do we really need or even want to be offering establishment grants to manufacturers who more than likely will uproot to extract more value from their products ? I really dont think so. If there is value to be extracted from manufacturing locally its the market, not tax payers money, which will determine at what level that value is sustainable.

The money would be better used doing something useful for the community.

[manxman8180]

Manufacturing is one of the few industries which actually creates 'wealth' for an economy. In general, service industries just re-cycle money which already exists within the economy.

Not the case these days and hasnt been the case for quite some time. The emergence of a truly global economy has positioned services just as likely to generate Trade as is Manufacturing.

And of course in the sentence after the one you decided to quote me from, I acknowledged the very same thing, or at least very similar.

 

The money would be better used doing something useful for the community.

What, like for providing financial assistance to local firms in order to ensure continued levels of employment within a sizeable part of the economy. Oh, hang on, that's exactly what they are doing.

 

Package it any way you want Mr Wolf, and I know that you like to profess your knowledge on trade and market etc. However, manufacturing adds a great deal to our local economy. So it should be supported in every way possible, whilst maintaining financial accountability. If the amounts of money you are referring to were vast, or indeed out of proportion maybe with assistance (or incentives) made available to other organisations then it may cause more of a stir.

[LoneWolf]

What, like for providing financial assistance to local firms in order to ensure continued levels of employment within a sizeable part of the economy. Oh, hang on, that's exactly what they are doing.

 

That ,Manxman, is the nub of it. it isnt tax payer's money which will ensure continued levels of employment in manufacturing. It cant and will never be able to. Its a total waste. The only factor able to ensure employment in manufacturing is the value it may or may not produce. We have already seen, in the case of companies such as Strix, the value is mostly illusory. If it wasnt, they would be expanding locally not contracting.

Take a look at the result of Govt investment in manufacturing in Port Erin .. nice empty building. The money would be better spent on something useful for the community.

[manxman8180]

LW, I'm sure if you look into all of the payments, you will find some duff projects, you have a legit point on that.

 

But I genuinely believe that for those businesses who have a sound business case, they should receive support. Yes, the success of the organisation will not be down to the grant alone, the end product must be needed, of sufficient value, blah blah.

 

But, sometimes organisations need a helping hand. And the Govt should offer it where appropriate.

 

You obviously don't agree, which is fair enough, we all have different opinions.

[Albert Tatlock]

Is a million pounds worth of service industry output the same as a million pounds worth of manufacturing output ?

I am sure an economist would provide you with a very long and detailed answer to this question. But, in short the answer is No.

Just a quick clarification on this one Manxman. In a free market economy its Trade which determines the value of an economy. On that basis it makes little or no difference if Trade is generated by manufacturing activities or by service type activities.

 

Manufacturing is one of the few industries which actually creates 'wealth' for an economy. In general, service industries just re-cycle money which already exists within the economy.

Not the case these days and hasnt been the case for quite some time. The emergence of a truly global economy has positioned services just as likely to generate Trade as is Manufacturing.

Spend a year or two on the prompt desk and you will witness first hand the continuing decline in traded commodities for manufacturing in the UK area. [its decline has been dramatic]

There is a reason for this. Those high value products we hear so much about often turn out not to be such high value as we thought. Otherwise their manufacturing location would remain right here in the UK area.

I would argue, if we really need manufacturing, then the market itself will ensure it survives.

My point being, do we really need or even want to be offering establishment grants to manufacturers who more than likely will uproot to extract more value from their products ? I really dont think so. If there is value to be extracted from manufacturing locally its the market, not tax payers money, which will determine at what level that value is sustainable.

The money would be better used doing something useful for the community.

Lonewolf, your views are the typical views of a short-termist.

 

You fail to realise that you are simply addressing GDP and are ignoring the needs of the population. Manufacturing remains a crucial source of value-added, exports, and productivity. I reject the notion that we are developing a “post-industrial” economy in which manufacturing is no longer central. We need manufacturing to provide investment, productivity growth, and good quality jobs for UK/IOM workers. The bulk of finance and service sector jobs are generally very low skill, and there is a significant danger, that once India and China come online properly, many of these jobs will also very quickly migrate (especially with the rapid development in computer and telecommunications technology) resulting in massive unemployment in the UK with no run-off areas to turn to. It is only by maintaining a knowledge and skills base that you can ensure you produce things that other countries want and cannot more easily produce for themselves. There is little skill or reward involved in processing a financial transaction and your comments do nothing but advocate the deskilling of the UK workforce for short term financial gain.

 

In the UK, financial institutions need to recognise that manufacturing investment may require a longer term view than other types of investment. Banks in particular should review their lending policies with respect to small firms. One of the factors behind this investment problem is the attitude of much of UK corporate culture represented by comments such as yours. It is manifest not only in the pressures the City puts on companies seeking investment but also within companies in the way they address issues such as training and restructuring. These attitudes have resulted in: a failure to invest in research and development and innovation, inadequate skills levels among managers and employees, inadequate political support and the failure of governments of all political persuasions over the years to give manufacturing the priority it deserves and set out a proper strategy for the long term. This decline continues despite employers, economists and the government all paying lip service to the importance of manufacturing to the British economy, which nevertheless, still accounts for around a fifth of total output and for 60 per cent of UK exports.

 

Company boards and shareholders need to recognise that the returns on required investments will not always be short term. They should also consider their current emphasis on shareholder value as the key business driver, as opposed to the interests of other stakeholders. Moreover, institutional share ownership and relative ease of takeover does nothing but encourage a focus on short-term profitability, rather than long-term market share or added value.

 

I dread to think where the UK/IOM will be if everything is left to the market. Once we have left manufacturing behind and then the finance and service jobs are outsourced, the result can only be: a handful of rich people living here and millions unemployed and living in poverty (i.e. a third world country).