Thirty years ago the UK was the sick man of Europe. Today we are the most successful macro-economy in the developed world, enjoying low inflation, low interest rates and low unemployment.
Manufacturing has a fabulous future in this country, so it is very important that whatever else happens this year — whoever wins the general election and whatever the main parties put in their manifestos — nothing should be done to harm that. Nothing is more important for all of us as a nation than to maintain the stability of the economy.
Now we have the challenge of building on it. We are restructuring our economy more quickly and more effectively than any of the other major nations.
Not for us the tariffs, the subsidies and the laws to keep out imports and to stop offshoring. Not for us the protectionism of the US or France. What we do as a nation is to just get on with it. The offshoring that’s going on in India and China we reckon last year put about £16bn into the UK economy.
The reason for this is because we have low unemployment and we don’t have enough skilled people. If you take the work being done by somebody and send it off to somewhere else, as long as you replace it with some more, better value-added work — which should also bring on a consequent skilling of the person — then you create more value and become more productive.
People earn more money, they have more disposable income which stimulates the economy, everybody pays more tax, you get more schools and hospitals and the GDP goes up.
That is why as a nation offshoring holds no fears. The other reason globalisation works for the UK is that if you want to make something, or provide a service that will sell only on price — commodities — India will have your lunch and China will have your dinner.
But if you want to make something that is value-added, quality, innovative, brand, then the world will pay you top dollar. And happily, the one nation that has got out of commodities and into value-added quicker than anyone else is the UK.
That means the world is prepared to pay for what we do. Add that on to a stable economy, and we are better placed at this point in the 21st century than any of our major rivals.
If you don’t believe me, look at two examples. More, different car manufacturers make cars in the UK than in any other country. And to find the value-added end of that, look at Formula One. Motor racing engineering in this country employs 50,000 people and puts £3.5bn into the GDP. That’s value-added, that’s quality, that’s tomorrow’s manufacturing.
And look at aerospace. I had a fabulous day in Toulouse looking at that amazing UK manufacturing success story the A380. Over 50 per cent of the aircraft is researched, developed and built here. I was really proud. I thought to myself, there shouldn’t be aschoolchild anywhere in the UK that isn’t being told ‘that is tomorrow’s manufacturing’.
Sir Digby Jones is director-general of the CBI. This is an edited version of his speech to the annual dinner of the Manufacturing Technologies Association.