Manufacturing .. Do We Need It ?

[Chinahand]

I've been mulling this topic for a while, but in the end I do think I can add a contibution so here goes.

 

There is little doubt that manufacturing industry is undergoing a relative decline in the Island, but I am much less clear if it is undergoing an absolute decline.

 

Reliable data is difficult to get a hold of and out of date, but the Isle of Man National Income Report 2003/2004 gives time series data for all the sectors making up GDP. In 1992 Manufacturing Industry contibuted £77 million to the Manx economy; in 2003 it was £114 million, by far the largest amount it has ever contributed.

 

These figures are adjusted for inflation and so show Manufacturing growing on average 3.6% per year above inflation throughout the 1990s and into the millenium. That is a bloody good record.

 

However the rest of the Island, and especially the Finance Sector has grown even faster and so this has made manufacturings contribution fall as an overall percentage. The Finance sector grew at 10.2% per year over the period and the Island as a whole 7.3%: the result Manufacturing slipped from providing 10.8% of GDP in 1992 to 7.4% in 2003.

 

If you were to ask me which sector is providing more stable, sustainable growth, my answer is definitely Manufacturing and its relative decline is due to unsustainable growth in the Finance Sector as it has relocated to the Island.

 

Of course there is then the issue of employement: Here I can only get information from the 2001 Census which doesn't provide any time series data. It shows as others have said that about 3000 people are employed in Manufacturing.

 

Banking also employs over 3000 people, but the overall picture is more complex than a simple finance manufacturing split with other sectors also employing over 3000 people: retail, public admin, banking, medical health services. Transport & Communications, Education, Construction, Miscellaneous Services Insurance and Entertainment & Catering all employ over 2000 people each.

 

The picture is about as I'd expect it, a diversified economy with multiple sectors all providing contibutions.

 

I am absolutely certain that manufacturing is declining absolutely in terms of number of people employed, but those declines are the large scale, low added value jobs of people picking and placing widgets on assembly lines.

 

I totally disagree with Rog (surprise, surprise) that the government should intervene to maintain such jobs for the "less intelligent". I'm certain various people wanted to retain the corn laws to keep "less intelligent" peasants on the fields as it was obvious that was all they were capable off ... bull then, bull now.

 

These poor folk will no longer be bored to death sitting on an assembly line in a factory and will now be equally bored photocopying, form filling and answering telephones.

 

Does the Island need manufacturing ... yes, but I'm not convinced at all it needs more of it than it has at present, its one element of the economy and one that isn't doing badly. I absolutely reject the idea that large scale government subsidies should be encouraged as part of a strategic plan to increase its influence on the economy. I believe it can develop organically quite well without government interference thank you. Currently, as expected, its moving away from mass assembly to higher added value products based on higher technology and innovation.

 

My analysis is that the assembly industries spawned a series of support industries in the 1970s and 80s such as tool and jig making. In the 90s and now these companies have successfully moved on as the assembly industries have declined into higher tech products, such as defence, oil industry etc and this expertise now has a sufficient mass to attract other industries such as biotech etc. The figures show a resonably bright situation with companies adapting to changing circumstances.

 

In May we had 711 job vacancies and 545 unemployed. I see no need for more factories.