Manufacturing is essential to the UK’s economy — and it depends on EU membership

The Brexiters' alternative is a zero-hours, low-skill, low-paid economy

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Economics professor Patrick Minford, who supports the Brexit campaign, said recently that ‘if we left the EU, it seems that we would mostly eliminate manufacturing.’

Minford – who was a major proponent of Margaret Thatcher’s economic policies in the 1980s – says this wholesale elimination of manufacturing post-Brexit ‘shouldn’t scare us’. In fact, he said we should welcome it. He also went onto say that new imported BMWs and brie would be cheaper too.

But what if the Brexit Prof is right? What would happen if UK manufacturing eventually disappeared?

Firstly 2.6m jobs would be gone. Manufacturing accounts for nearly half of all our exports at 44 per cent. Business research and development in the UK would take a massive hit, as 69 per cent of R&D is spent on manufacturing. We would say goodbye to our position on global league table – we now stand seventh in the world in terms of manufacturing output.

Although the services industry dominates the present UK economy, manufacturing still represents 10 per cent of our GDP and is a major contributing factor in driving productivity – a key measure in the long-term health of the economy and working people’s living standards.

Unlike services, which Minford said we should embrace as we give up on the business of making things, manufacturing provides well-paid, highly skilled jobs. Average annual wages in manufacturing stand at nearly £31,000, compared to only £26,500 in services.

But the future health of manufacturing in the UK is, in Unite’s view, very much dependent on the UK’s continued membership in the European Union.

The Engineering Employers Federation, which represents the UK’s manufacturers, notes that the EU accounts for 18 per cent of global output – and the UK sells 50 per cent of all its exports to the EU. The EU is also a major driver of innovation in the UK – it invests £11bn each year on innovation programmes, of which 15 per cent is invested in the UK.

What’s more, the leading destination for foreign investment in the EU is the UK.

The future of the UK’s exports and imports of manufactured goods is inextricably linked to continued membership in the EU. In 2012, the value of imports of manufactured goods from the EU to the UK stood at £158bn, while the value of exports from the UK to the EU stood at £104bn.

Manufacturers are united in their belief that the UK is better off remaining in the EU.

A recent EEF survey says that 84 per cent of UK manufacturers believe being part of the EU is a positive aspect of the UK business environment.

The survey also showed that an astounding 50 per cent of manufacturing companies would be less likely to increase investment if the UK were to leave the EU.

Other important manufacturing trade bodies including the Society of Motor Manufacturers; the Chemical Industries Association; ADS – the body which represents the aerospace, defence, security and space industries; the Ceramic Federation of Great Britain and others support the remain campaign.

A some of the UK’s top manufacturing companies employing thousands of trade union members including Airbus, Siemens, Nissan, Ford, Rolls-Royce, Cummins Engineering,  BAE Systems, Unilever, Astra Zenca, BMW, JLR, BP, Pearson Publishing, GE, GKN among others, have publicly stated it is in the UK’s interest to remain in the EU.

An open letter signed by some of the UK’s top engineering companies said:

“British engineering is deeply integrated with global markets and companies. If Britain votes to leave the EU, the period of uncertainty about the terms on which access to these markets would be granted would be a threat to the sector. Brexit would be a loss of automatic access to the EU market.”

The UK’s main manufacturing unions, Unite, GMB, Community and USDAW have all come out in favour of remaining in the EU.

Of course Brexit supporters have dismissed this overwhelming support arguing we can go it alone and other countries would beat a path to our door. What nonsense. They say we can negotiate our own trade arrangements with EU countries, the USA and the rest of the world. This is naïve at best.

Big trade deals take years to negotiate. What do we do in those five or more years before new trade deals are agreed? Investment dries up, tarrfifs get imposed – chaos looms.

President Obama made it clear, much to the chagrin of the Brexit brigade that the UK would be at the back of the queue in any trade negotiations the with the USA if we were to leave the EU.

Outside of the EU, we won’t have the power of being in a market of 500 million people, we will be in a market of only 60 million. What do the Brexiters think the US and EU countries will do if they want a trade deal with us? It won’t be a negotiation – they will probably send a fax saying ‘sign here’.

No modern, developed country can exist without having a strong manufacturing base. What would happen is that the UK would have a perpetual zero-hours, low-skill, low-paid economy with a race to the bottom.

Once high-skill, high-wage manufacturing jobs are gone, they will not come back come back and those UK workers looking for good jobs will move overseas and they’d take their skills with them – we would lose the best and the brightest.

The decision to stay in or leave the EU will have monumental consequences for the future shape of our economy. Do we want a world with better jobs for our children and protection in the workplace? Or one in which we’re in free fall in a race to the bottom? The latter is the Brexit option.

Tony Burke is Assistant General Secretary at Unite

5 Responses to “Manufacturing is essential to the UK’s economy — and it depends on EU membership”

  1. John Cooper

    Comrade,

    Any economy in any progressive society needs to be balanced with Manufacturing at the heart of that economy with the Automotive industry at is core .Mr Minfords believe that the UK can move forward without manufacturing dependent on the service sector alone is a nonsense and the economics of the madhouse.

    The UK must remain as part of the EC an EC committed to positive change in favor of working people and there families.

    Comrade for all the reasons you have outlined in your article and more we should remain as an active member of the EC in line with Unites policy and continue to argue and to shape it in Unite likeness.

  2. James Kemp

    Why is staying in EU NOT a race for the bottom with the EU gobbling up states that have virtually no manufacturing at all like Turkey and the x-russian block states they want to join soon? All they have to offer is a huge uneducated workforce in excess of 120+ million at last count that will be swirling around the EU states depressing wages to a huge low point.

    Do you really think people on less that £1 a Day will stay in there country or go west looking for work like we had in Poland 10 years ago? All this Stay in it will be better ignore the future EU plans like with TTIP, so after the documents were leaked last night where are all your amendments? Oh right they ALL were ejected by the USA so secret courts ahoy if you stay in the EU. Your manufacturer can be sued by a another supplier in this case if they don’t think there making enough profit!

    The NHS is NOT i repeat NOT protected we see now by TTIP and they Left member of the EU parliament don’t have the numbers of seats to vote it out do you? So yes it looks good on paper with all this scare but it’s far far worse for the UK when you really look at ALL the details.

    But i bet i get the usual i am a denier attacks well yes i am. Because i can read the documents i can see the plans of including Turkey and the other states very shortly so why not debate this not more scare abou there will be no jobs for your kids. Please don’t try the i am scared of immigration because i am not it’s the huge numbers of workers. That can more around the EU soon i am concerned about not there race, religion or where there from!

    How many jobs for the kids when they will be competing with a extra 120 million plus extra workers?

  3. Mike Stallard

    What a naïve view of trade – from a TU grandee too! Stuck right bang in the 19th century!
    If you go to this link, you will see the truth. Free trade agreements like TTIP take years to negotiate and then they favour the huge firms which have legal teams and other clever people who can arrange matters to suit their interests. The EU is in no way favourable to the working man. For a start a lot of kids straight out of school are on the dole in Mediterranean countries. For another thing, the immigration in Germany and Sweden and Holland must have some effect on wages. The EU is an organisation run by the Commission for the benefit of the rich and lobbying few.

  4. Steve murphy

    To have a vibrant economy and to reduce unemployment Manufacturing should be the core component. A country that values its people and cares about the masses would automatically build a sustainable economy by increasing its manufacturing base, unlike Minford who was a poodle it Thatchers think tank, simply if he says that we do not need a manufacturing base then quite clearly “we do”

  5. andrew dumelow

    Ive read Patrick 2005 papers regarding the EU you have cherry picked statements from the papers to suit your belief. The true facts in the summing up of stay or leave the EU is Patrick simple states it would have little or no impact on manufacturing and goes on to say actually we could see an increase the UKs manufacturing exports due to free trade if we leave the EU.

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