UK Manufacturing – don’t bank on a low pound sterling

It has been claimed, based on the last set of economic output figures, that the UK’s manufacturing has experienced an upturn and is contributing to the Government’s aim of re-balancing of the economy.

I am a supporter of the manufacturing sector, and was concerned at its hollowing-out in the 1980 on the back of a high Pound Sterling and high interest rates. I was also concerned that recent years have seen a rise in the view that manufacturing doesn’t matter, and the attitude which (mistakenly) believes that manufacturing isn’t part of the knowledge industry.

However, it is one thing to see the UK’s exports rise in the short term helped by a low Pound Sterling, but it is the long term strength of our manufacturing sector which matters if the economy is to be rebalanced.

I read in The Guardian (27/4/11) that The Potteries in Stoke on Trent is on the up again after some troubled years.and I am very pleased to see it. From being the home of high quality ceramics for over 200 years, it has shrunk from some 200 factories in the 1970s to only about 30 today. However, now some manufacturing has been repatriated from the far-east where quality declined, and firms such as Portmeirion (which acquired the Spode and Royal Worcester brands from their administrators) and Emma Bridgewater are reported as doing well by mixing tradition with modern demands,

I was involved with a project in The Potteries when it experienced its last revival in the mid 1990s helped by a low Pound Sterling, and I recall being surprised how little the potters were investing in design and were relying on selling cheap, and that they didn’t seem to understand the value of the ‘Made in Stoke-on-Trent’ brand and its guarantee of quality. I explained to them that they needed to sell on design (modern as well as traditional) and quality, and that they needed to make things which were so desirable that customers just had to have them in preference to something cheaper.

This boom didn’t last, for when the Pound Sterling rapidly increased in value in the late 1990s, the potters suddenly hit trouble, many withdrew from the project I was involved with, and some went to the wall. It is estimated that between 1998 and 2008 20,000 jobs were lost.

The current low value of the Pound must have helped with this latest revival in Stoke’s pottery industry, as it has the rest of UK manufacturing which has also experienced growth of late. But the question must be ‘Can UK manufacturing still survive once the Pound increases in value?’ which it will do sooner or later. Some manufactures, such as Portmerion and Emma Bridgewater seem to understand that design, quality, innovation and customer focus are vital – but this needs to be seen across the rest of the UK’s manufacturing sector if it is to survive a high Pound when it comes (already some are calling for the Bank of England to increase interest rates to boost the exchange rate). And, the service sector mustn’t forget this lesson either – do our banks really serve their customers or do they see the customers as being there to meet the the needs of the banks?

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One Response to UK Manufacturing – don’t bank on a low pound sterling

  1. simon hinds says:

    Sterling is due for a bit of a crash. Oil and gas is one reason it retains its value. Another is because the US Fed Reserve buys UK bonds in order to artificially keep its value up. Bank of England, in turn, buys US bonds. The dollar is due for a big dip and Sterling will dip with it.

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