Value of UK manufacturing.

Is uk manufacturing in decline?

A recent report by Cambridge University states there are many processes and people involved in the manufacturing value chain that just aren’t being counted by government statistics. Manufacturing is in danger of being side-lined.

Manufacturing’s value to the UK economy is currently pitched at around 9%, compared to services, which make up 70% of UK GDP.

Manufacturing has changed since the method of analysing its contribution was first formulated but this isn’t accounted for in the figures, highlighted by the Cambridge University report. 

Many services that feed into manufacturing, such as R&D, industrial design, analysis, testing and recycling, were not being accounted for The Cambridge University report found.

It seems the ONS (Office for National Statistics) has got it wrong on how manufacturing businesses are classified.
Often outdated, and do not relate to the way modern supply chains work.

The problem lies with the fact that all the manufactruing process is not all under one roof as it once was. ONS way of classifying things classification definition is transform raw materials into finished goods in one factory. This does not happen anymore.

The making of a pair of jeans:
There are many people involved in its production: a designer, a pattern-cutter, a grader, a fit technologist, a fabric knitter, a yarn spinner, a dyer, and a machinist and a presser, to name but a few. Once all these people might have all been under one roof and all been included in the ONS figures.

Many of these process are now part of the supply chan and are external companies.  The ONS does not include some of these within manufacturing. A designer and pattern cutter will probably fall under the ‘services’ category – yet without manufacturing their jobs wouldn’t exist.

Each company is responsible for its own SIC code, but if the company has evolved then it probably has not updated the SIC Code.

Many businesses in the UK who originally manufactured on UK soil may now be producing their products overseas, but because they’ve not changed their SIC code to reflect this, they still fall under manufacturing. So this can skew the results even further.

Businesses that fall under the the UK VAT threshold are also excluded. A point raised in the Crafts Council’s ‘Measuring the Craft Economy‘ report a few years ago.

The report valued the economic output of

The craft industries, most of whom make some type of product, generates around £3.4bn to the UK economy but these businesses are also not likely to be included in the manufacturing figures acording to the Craft Economy‘ report.