LOSING MANUFACTURING CAPACITY IS DANGEROUS
The Trend is Clear
For over twenty years manufacturing jobs have been drifting abroad. The obvious beneficiaries have been China and India. The obvious losers have been Britain and the USA.
The individual multinationals and individual manufacturers have all reasonably said that whether they wish to move their manufacturing abroad or not, they have no choice. The labour costs in the third world are so cheap that the workers in the first world are uncompetitive. The bosses say that to remain competitive in the marketplace, they must manufacture in the third world.
Even "flagship" companies like Marks and Spencer and Burberry have started sourcing abroad.
Advantages of outsourcing manufacturing
Transferring jobs to the third world has significant advantages for capitalists. In the third world countries labour is ridiculously cheap. Workers there are competing against child labour and against slave labour. There is little tradition of organisation into trade unions because there are millions of blacklegs willing to work. The police will baton charge a picket line and arrest activists. A worker who complains or raises a commonplace workplace grievance is frequently just fired. The law frequently favours the employer. Even if the law does not favour the employer the police the courts and the government all do.
In the third world countries there are frequently no unemployment pay, old age pension, or state health system, so the manufacturers do not pay towards these social costs either.
The Western capitalists frequently do not own or run the factories, reducing the amount of capital they must employ. Nor do they hold stocks of raw materials, paying for the finished goods only as they are loaded on ships. Sometimes the capitalists obtain say 3 months credit, giving them time to ship and sell the goods before payment day.
The third world countries gain jobs, economic growth, local profits, hard currency, and inward investment from the opportunity to make money supplying the West.
And our citizens in the West have the opportunity to buy clothes and manufactured goods cheaply.
In the West there are many who gain from the transfer of manufacturing jobs abroad. Local pollution is reduced, and there is much less stress on supplies of fuel and water than if national manufacturing were at past levels. If goods are cheaper shopkeepers can often sell more of them. Clothing, electrical goods and toys are obvious examples.Components can be cheap.
Most of the jobs lost are low skilled or unskilled, and those jobs have been evaporating from causes other than jobs being shi[pped overseas. Computers and machine driven tools can do many jobs more reliably and considerably cheaper than an unskilled worker. Many who do this work are peripheral to our society - immigrants and the working poor. Most intelligent working class people have seen the writing on the wall and have moved out of manufacturing into other industries.
It can be argued that the export of low level manufacturing jobs abroad is a natural consequence of relatively high Western wages, high employer contribution to social costs, and the changing nature of manufacturing. There is still skilled manufacturing happening here that the third world cannot yet do, and by the time they can, we will have moved forward too. Our model is capital intensive highly skilled work rather than metal bashing and plastic bending.
It is said that the trade unionists who protest job losses are dinosaurs, and are reactive rather than proactive. The message to them is "stop whingeing!".
When Trouble Comes
Britain was "The Workshop of the World". Yet the experience of World War II was that dependency on imports is a potential danger.
Britain had traditionally imported food from other countries. Some of those countries were closed by war. All goods had to come by sea, and losses from U boats during World War II were horrendous. From 1939 to 1945 U boats hit (and usually sank) 3,474 ships. If we had not had significant manufacturing capacity, we would have had to import even more manufactured goods, weapons, ammunition, vehicles, and other supplies.Without American manufacturing capacity we would have lost World War II. We only averted food riots by strict but fair rationing of food.
If there were a war or significant international difficulties now, Britain would not be able to stand alone as we did from 1939 to 1943. We simply do not have the manufacturing capacity.
Lead Times and Logistics
In World War II we had "dilution" where women workers came into established factories and were trained up for skilled work. On the whole they were taught to do one job well rather than the full range of skills expected of say a fitter. They were effective. The agreement was that when the men came back from the war the women would go back to the kitchen.
If there are not existing factories and workforces to join, there is no machinery to work on and no cadre of skilled older workers to train and supervise the dilutees.Most machinery now is imported, so in a war situation spare parts are going to be very difficult to obtain. We will not have the skilled mechanics who can improvise.
Many colleges now have extremely limited facilities for teaching metal mechanics, because the factories are not there to send the apprentices to be taught. These departments are expensive to run because they use a lot of space per student, cost money to update the machinery, and have high staff student ratios. When I taught Law it was not unusual to have 40 or 80 students in the classrooom. With practical engineering that is just not possible. So Colleges want to teach Law but are reluctant to invest in engineering.
Rethink our priorities!
There are more graduate engineers now than there were in 1939. There are tens of thousands of people with engineering qualifications. Arguably we are better placed now than we were in 1939. But if we do not have the UK machine tool industry to make the machine tools the factories will need, we cannot set up or expand the factories. Yes we can put our machine tool factories on three shift working (presumably using direction of labour to staff the factories), but the lead time to equip industry to produce what we need ourselves is just too long.
What we have done is to transfer our manufacturing capacity to Asia, leaving ourselves extremely vulnerable. I do not believe we have seen the last of war, and there are other threats such as plagues or oil shortages which can disrupt society and disrupt shipping.
We need to take action now to protect our society.