SYSTEMS · DECLINE
Britain Has Not Run Out of Industrial Strategies.
It Is Running Out of Industry.
Westminster keeps announcing an industrial revival. Beyond the speeches, the workshops, customers and supply chains keep disappearing.
Yesterday, somewhere near Manchester, I passed a small industrial yard just off the motorway.
There were a few forklift trucks, a modest unit and some signs of activity, but the place felt strangely still. It may have been a perfectly decent business. It may employ skilled people doing valuable work. This is not about mocking the company or the people inside it.
But I looked at that little yard and thought: China is probably producing those forklift trucks—or the components inside them—at a rate we can barely comprehend.
China has factories feeding factories, cities built around production and entire regions containing raw materials, component suppliers, assembly plants, research centres, transport links and ports. Britain has little yards beside motorways and politicians still speaking as though we are an industrial juggernaut.
We are not comparing one British factory with one Chinese factory. We are comparing isolated British businesses with complete industrial ecosystems.
And we are nowhere near being the juggernaut.
01
The survivor in Rotherham
That is what makes the experience of Chris Rea and AES Engineering so revealing.
Rea founded the Rotherham business in 1979 with a team of five. Today, AES Engineering employs more than 2,000 people across 70 businesses, operating from 109 locations in 40 countries. It designs and manufactures mechanical seals, bearing protectors and condition-monitoring systems used in water, chemicals, power generation, steel, paper, oil and gas.
This is serious engineering. Yet Rea says its UK sales have fallen by 23% as British customers close around it.
That figure does not mean British manufacturing as a whole has contracted by 23%. It is specific to AES’s domestic sales. But in some respects, that makes it more disturbing. Here is a successful, well-capitalised international engineering group watching its British customer base disappear.
AES can survive the view because it has businesses overseas, customers across multiple industries and sufficient resources to keep investing. It has committed approximately £27 million to green technology and facilities in South Yorkshire. When Britain weakens, the group can sell elsewhere.
A small engineering company employing 15 or 30 people cannot do that.
It may depend upon three or four major customers. It probably does not have operations in 40 countries, an international sales department or millions available for automation and expansion. If a nearby factory closes, a contract disappears or a European customer decides that dealing with post-Brexit paperwork is no longer worthwhile, the smaller company cannot simply redirect its products across the world.
It loses the order. Then perhaps it loses a machinist. Then an apprentice is not replaced. Then a piece of equipment is not renewed. Eventually, the doors close.
If a £280 million international engineering group needs its overseas operations to shelter it from Britain’s industrial decline, what chance does the little yard beside the motorway have?
02
Ten years of industrial resurrection
Britain has not lacked promises.
Theresa May promised a “great, global trading nation” and an industrial strategy that would shape the economy “for decades to come.”
Boris Johnson announced a “green industrial revolution” intended to support as many as 250,000 jobs.
Levelling Up would unleash the productive potential of every part of the United Kingdom.
Kwasi Kwarteng promised 2.5% trend growth and a “virtuous cycle of growth.”
Jeremy Hunt declared: “Our plan for the British economy is working.”
Rishi Sunak’s government promised the best place in the world to start and grow a manufacturing business.
Keir Starmer promised the “highest sustained growth in the G7.”
Invest 2035 promised the certainty and stability businesses needed to invest.
Another Modern Industrial Strategy arrived as another ten-year plan.
Andy Burnham now wants to reindustrialise Britain.
Modern Industrial Strategy → Green Industrial Revolution → Levelling Up → Growth Plan → Advanced Manufacturing Plan → Invest 2035 → Modern Industrial Strategy → Reindustrialise Britain.
The country keeps promising long-term certainty by replacing its previous long-term strategy. Every administration speaks as though it has just discovered factories.
03
The Brexit contradiction
British deindustrialisation did not begin with Brexit. Manufacturing communities were being hollowed out long before the 2016 referendum, under governments of both parties.
But Brexit damaged precisely the conditions upon which a credible industrial revival would depend.
Manufacturing needs predictable rules, affordable energy, skilled workers, long-term investment, integrated supply chains and easy access to large markets. Components may cross national borders several times before a finished product leaves the factory. Friction is not an abstract economic concept when production schedules depend upon parts arriving within hours.
The European Union was—and remains—Britain’s largest neighbouring market and the industrial system into which many British manufacturers were integrated.
Leaving the Single Market and Customs Union introduced customs declarations, regulatory complications, border delays and uncertainty. It made Britain a less convenient base from which to supply Europe and created another reason for international companies to place their next investment inside the EU.
“The erection of new barriers to trade…means less trade, fewer jobs, lower growth.”
Theresa May, January 2017
Her government then pursued a form of Brexit that erected those barriers.
The contradiction has now become almost comical. Britain left the European industrial system promising to rediscover its place as a great global trading nation. Ten years later, the British government is lobbying Brussels to ensure UK manufacturers are not excluded from the European Union’s emerging “Made in Europe” industrial policy.
We left the system, added friction to the relationship and are now asking for special arrangements to prevent that system from treating us as outsiders.
That is not industrial sovereignty. It is industrial dependence with additional paperwork.
04
A country of surviving workshops
Britain still manufactures important things. It retains world-class companies in aerospace, pharmaceuticals, defence, automotive engineering and other specialist fields. The argument is not that every factory has disappeared or that British engineers have forgotten how to engineer.
The problem is scale, depth and density.
An industrial country is not simply a collection of famous companies. It needs foundries, toolmakers, fabricators, chemical producers, component manufacturers, maintenance specialists, technical colleges, research facilities, logistics networks and customers. Those businesses need other businesses around them.
When a small supplier closes, its knowledge does not sit patiently inside the empty building waiting for the next industrial strategy. Experienced workers retire or move elsewhere. Machinery is sold. Apprentices are not trained. Customers find foreign suppliers. Banks become less willing to lend to the remaining companies. The ecosystem becomes thinner, making every survivor more exposed.
China has industrial ecosystems. Britain has industrial survivors.
Britain then celebrates the final assembly of a product whose components, machinery, batteries, electronics and raw materials were produced elsewhere. A foreign company announces an investment—often after negotiating government support—and ministers present it as evidence that the renaissance has begun.
One factory is opened while an ecosystem disappears.
05
Speeches do not make supply chains
Andy Burnham may be entirely sincere about reindustrialising Britain. Giving regions greater power and forming closer relationships with manufacturers could produce worthwhile results.
But no mayor and no prime minister can rebuild an industrial economy through language alone.
Britain faces high industrial energy costs, weak investment, skills shortages, damaged access to European markets and decades of lost productive capacity. It is attempting to compete against China, the United States and the European Union—all of which can operate at a scale Britain no longer possesses.
China has an enormous domestic market and an industrial system built to produce at speed. The United States is using subsidies, public procurement and state power to attract strategic industries. The European Union is developing policies designed to protect and expand production within its own economic bloc.
Britain offers another strategy document.
Newspapers report every promise as though the previous ten years of promises never happened. Ministers tour factories in hard hats. A funding figure is announced. The words “world-leading” appear in the press release. Everyone agrees that growth is essential.
Then another customer closes in South Yorkshire.
Another small supplier loses an order.
Another skilled worker leaves the industry.
Another little yard beside another motorway becomes quieter.
Britain keeps talking like an industrial juggernaut because nobody in Westminster wants to admit what the country has become.