BRITTAN MARKET

Brittan Market



Brittan market

Introduction

Today, the picture is bleaker still. Three years of recession have hit manufacturers particularly hard. During the exchange rate mechanism (ERM) era, high interest rates and an overvalued exchange rate hurt capital-intensive industrial companies and eroded their export competitiveness. With freedom from the ERM straitjacket coinciding with the collapse of key export markets in recession-hit Europe, no one is expecting an early pick-up in activity (Kevin, 2003, 47-125).

Manufacturing sector

Views over the health and prospects of the manufacturing sector are sharply divided. Many argue that so-called 'de-industrialisation' is an inevitable stage of economic development and that public concern over the demise of smokestack industry reflects misplaced sentimentality. Critics retort that the speed and scale of Britain's de-industrialisation is uniquely and damagingly rapid, requiring urgent policy action to head off impending disaster. Like most well-worn controversies, clear thinking is clouded by a fog of misinformation, misconception and downright ignorance. That the issue deserves further attention is, however, not open to question.

Industrial Base

'The "industrial base" is the "secondary" sector of the economy that produces tangible goods,' explains Professor Mike Hardy, consultant at Lancashire Enterprises. 'The so-called "primary" sector produces raw materials like agricultural goods and minerals and the "tertiary" or service sector produces services like retailing and distribution.' Hardy points out that, while the terms industrial base and manufacturing sector are often used interchangeably, the latter is technically a subset of the former. 'The secondary sector is dominated by manufacturing, but it also includes energy production and construction,' he adds. 'When people speak of de-industrialisation though, they are invariably referring to the manufacturing sector.' Table 1 shows the main categories of production within the manufacturing sector (David, 2004, 56-113). It reveals that, in all cases, employment was sharply down between 1981-91, with only three of the 14 sectors (chemicals, electrical engineering and paper) matching the performance of the service sector in terms of output growth. Since the onset of recession in 1991, the labour shake-out has accelerated, while output has actually shrunk across the board.

TABLE 1: THE MANUFACTURING SECTOR

Change in 1981-91 (% pa)

Change in output employment 1981-91 (%)

Metals

1.4

-17.3

Other Mineral Products

1.0

-49.1

Chemicals

3.3

-24.8

Man-made Fibres

1.0

-24.8

Metal Goods

0.5

-13.8

Mechanical Engineering

0.3

-14.3

Electric. + Instrument

4.0

-37.8

Motor Vehicles and Parts

1.5

-36.3

Other Transport Equip.

0.2

-41.4

Food

1.0

-19.2

Alcohol and Tobacco

0.4

-19.2

Textiles

-0.8

-50.1

Clothing

0.1

-23.2

Paper; Printing and Pub

2.8

-3.7

Total Manufacturing

1.9

-22.5

Total Services

2.4

+16.9

Classification of Companies

The classification of companies as manufacturing, rather than services is, however, somewhat artificial. Manufacturing firms rely on a raft of in-house services (eg, accounting, marketing, human resource management) to profitably transform rubber, plastic and steel into finished products. Service companies frequently process tangible goods as part of their core business: the delivery systems of McDonald's and Kwik-Fit, for example, are designed to add value to frozen beef patties and car tyres. Indeed, most commercial activities are neither pure manufacturing nor pure services, but a seamless blend of the two(Clemens &, Cook, 2003 341-466).

This essentially arbitrary distinction between manufacturing and services is important ...