Big future for small firms

As a professor of manufacturing, I am more optimistic about this sector today than I have been for years. Manufacturing output is 22 per cent higher than it was at the start of 1980, while manufacturing productivity has grown by 50 per cent since 1997.

Look at the profits some of our companies are making. Take the aerospace sector. We have virtually 35 per cent of the world's aero engine market. Then there is the car industry — we are producing more cars today than we have done over the past 25 years. Even companies that were supposed to have lost their credentials, such as Jaguar and Land Rover, have produced billion-dollar profits. I would not say that we have never had it so good, but we are having it okay.

Firms with fewer than 250 employees are responsible for about 40 per cent of our manufacturing value-added. These companies are a vital part of our economic landscape, and have been exposed to increasingly tough global competition. As open markets have extended, they have affected manufacturing sectors in different ways. Some that have a high value-added technological content, like aeronautics and the automotive industry, have outsourced but retain manufacturing in the UK. Electronic components and clothing have faced huge pressures from overseas competitors. That is not a bad thing, as the consumer has benefited from the competition. We hear a great deal about the movement of investment to China and India, but, beyond the sectors I have mentioned, most of the investment in those countries is for their domestic markets, not to re-import to the UK.