The past and future of manufacturing: observations 4
To round off my series of blogs on the UK manufacturing’s past, present and future, I wanted to look at a fine-grained disaggregation of the sector to see how it has changed and might change going forward. These deep dives are never fully satisfactory, as one can’t answer every question raised, but I think they illuminate the diversity that that single sector — “manufacturing” — encompasses and often resonate with what we have been hearing anecdotally about factories being opened, closed, repurposed or expanded.
The chart above shows what has happened to the turnover (colour of bubbles), productivity (X-axis) and employment (Y-axis) in manufacturing when broken down to around 200 sub-sectors. So, as previously remarked, overall, productivity has increased while employment has declined. While at the aggregate economy level, higher productivity is typically associated with higher employment, at the level of individual sub-sectors (in specific locations), the opposite is normally the case. This negative correlation is indeed what we also see for the manufacturing sub-sectors in the UK.
For the majority of sub-sectors (the light green bubbles), turnover has continued to increase somewhat, but increased productivity — perhaps due to automation or focus on smaller segments of higher-value-added products — has led to a decline in employment. Some of the larger sub-sectors in this group include parts dairy and cheese, medical and dental instruments, accessories and parts for motor vehicles, and metal structures.
Towards the bottom of the graph we also see a number of sub-sectors (in orange or red) where, turnover has declined and, along with it, employment. The most notable of these is printing other than newspapers — no doubt partly taken over by on-line communications — and communication and electronics equipment — the manufacturing of which has probably shifted to countries that have a combination of intellectual property, high-tech manufacturing experience, and a manufacturing-focused STEM workforce.
The manufacturing of motor vehicles seems a major positive exception in this graph: productivity has gone up by a decent amount, but turnover and gross value added have gone up even more, such that the number of employees has also increased. As the world turns to more and more electric vehicles, the opportunity to maintain this growth will partly depend on strengthening the local supply chains (e.g., for batteries) which (according to this graph) have not kept pace with the sector. Another bright spot with growing productivity and employment is distilling and other processing of spirits (likely partly driven by Scotland’s highly successful drinks industry).
For pure entertainment value, which sub-sector grew its turnover the most since 2008? It is too small to be visible on the chart (only around 1,000 employees with a GVA of just over £30 million), but grew its turnover by more than 600%. The answer is “Homogenised food products and dietetic foods”. What on earth are those? Well, based on googling, dietetic foods are “foods designated for carbohydrate, lipid, protein, vitamin, and other metabolism correction with modified content and/or ratio of certain substances compared to their natural content and/or with added substances or ingredients (absent in the original products).” Ahh — so protein bars!
I was also intrigued by the “Condiments and seasonings” sub-sector, whose employment went from 6,000 in 2008 to 10,000 in 2019. Would love to hear any intelligence on which condiments are on the rise. A quick googling suggests that some of the growth is around time-saving ingredients, such as pre-chopped and dried garlic or spice mixes. This wouldn’t surprise me, given that for many people it is time, not money, that is the genuinely limiting resource in their lives.
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