The Future of Manufacturing Industry in Scotland

On the first day of Congress 2011 in Ayr, the STUC published a discussion paper on the Future of Manufacturing in Scotland. The paper will form the basis of campaigning activity over the coming year and a web discussion forum will be establishd in the near future to enable debate about the report's recommendations. The STUC welcomes, and will respond to (serious) comments. The full report can be found here. This is the introduction:

An interesting thing started to happen after the financial crisis swept the globe in autumn 2008… politicians at Scottish and UK level started to talk seriously about manufacturing again. Indeed, a genuine commitment to examine how Government at all levels might more effectively support and nurture manufacturing has since been apparent in election manifestos and a blizzard of related policy papers has emanated from Whitehall and Brussels.

This fundamental rethink of economic and industrial policy is long overdue. The ‘financialised’ economic model, pursued with particular vigour in the US and UK, failed on both economic and social grounds: the narrow focus on finance and the primacy given to financial market participants in the development and implementation of policy led to a lop-sided economy; one prone to systemic crisis. Also, the model didn’t as was often claimed, lead to greater prosperity for all: it generated moderate GDP and productivity growth, an exponential rise in income and wealth inequality and a decline in social mobility.

And yet, the opportunity for genuine and substantial change already appears to be ebbing away. A full four years have now passed since problems first emerged in the US housing market but there has been no structural reform or effective re-regulation of the financial sector and the banks’ business models remain largely untouched. Incredibly, the influence exerted by financial insiders on economic debate and public policy appears undiminished.

The STUC believes that a reinvigorated manufacturing sector is a necessary component of a new, fairer and more sustainable economic and social model. Contrary to prevailing economic orthodoxy, there is no reason whatsoever that this cannot be achieved through a mix of clever and focused Government intervention together with reform of the financial sector to ensure that it supports rather than undermines the productive economy. Other advanced economies have managed to maintain far higher levels of manufacturing employment than the UK.

Scotland benefits from a skilled, productive and committed manufacturing workforce and many outstanding manufacturing businesses across a range of sub-sectors. Scottish manufacturing has experienced a stronger and quicker recovery than services. The STUC believes with the correct policy framework in place, manufacturing can continue to grow; both nominally and as a share of the Scottish economy.

The purpose of this paper is to provoke debate and discussion about the nature and shape of potential levers to support the growth of manufacturing in the years ahead.