How was your day on Wednesday? Wednesday was an outing day for me, as I attended the ONS Changing Shape of the UK Manufacturing event, which featured talks on manufacturing activity in the UK, the research and statistics behind them, as well as a wonderful chance to engage the public users with the officials who supply or produce the business statistics.
A few things I have learnt about UK manufacturing:
Manufacturing productivity has been a positive story since 1948
It has grown by 2.8% on average per year, compared with 1.5% in the service industry, which is also the industry dominating the UK employment market.
- There has been very little change in terms of output between 1978 and 2013, whereas jobs in manufacturing have seen a notable decline. This suggests that productivity has increased. The interactive graph below illustrates that:
Labour quality in manufacturing - a more skilled workforce
- Labourforce with no qualifications has dropped from 26% in 1993 to 15% in 2013
- Labourforce with a First and/or Masters degree - up 20% in the same period
Manufacturing sub-industries all contributing to the growth
In terms of contribution to manufacturing sub-industries productivity growth, we have seen a broad based increase across sub-industries, but huge growth has been seen between 1997Q1- 2014Q2 in the following sectors:
- Chemical & Pharmaceutical (interesting to note that this is also the sector which has the highest average weekly wage, £714, in the manufacturing industry, which AWW overall is £564)
- Computer, electronic, optical and electrical products
- Transport equipment
Manufacturing is a big spender on R&D
It accounted for 72% of all business R&D expenditure in 2012, albeit it only represents 10% of the economy in GVA terms
How you define a manufacturer?
- The composition of the UK manufacturing industry, the functional units of manufacturers have been evolving. Companies have outsourced support services, sub-contracted the transportation of goods, outsourced wholesale and retail, are very common in the industry nowadays. The “outsourced” functions, which could be lower productivity, could have been shifted to the services industry
The Industrial classification is quite specific about manufacturing sectors, and it is not designed to capture the global value chains. There are changes in horizon, e.g. Factoryless Goods Producer, classic example is Apple, they “manufacture” the ideas and concepts of an iPhone, but the actual phone is outsourced to manufacture in China
- Manufacturing productivity in that sense, has actually benefited from the sectoral shrinking number of employees
The rise of foreign ownership
- Output by UK-owned companies have been declining- a drop of £200bn across 1973-2009, whereas output by EU-owned company has been catching up, up by £70bn in the same period
- In the late 1990s, UK-owned firms with UK funding dominated R&D expenditure (around 60%). However, there is an opposite picture shown in 2008, where foreign funding has expanded, and dominated over 60% of the R&D expenditure regardless of the ownership of the firms
- Foreign-owned firms are driving growth and are more productive. They are, generally speaking, larger firms, and they come to the UK with a working business model
- Multi-plant firms, they become specialist in core competency manufacturing, and operating much more in services, such as wholesale & retail, as well as other business services, which match with point 2 above. Such a movement is called the “servitization”
Our Chief Economist, Lee Hopley, who presented at the event, said the analysis at the ONS event shows us exactly why UK manufacturing must be at the centre of a better-balanced economy.
'It’s declining share of employment and output is only a small part of the story as industry generates skilled jobs, productivity growth and the innovation and investment that can help to boost UK competitiveness. While this is a story of the past, the right business environment for manufacturing and a focus on rebalancing will ensure the sector continues to have a positive impact on the UK economy.’
Moving on from the serious learning, as a user of the ONS data, I have got a few fun facts to share with you all:
- Winston Churchill is responsible for the birth of ONS (formerly known as Central Statistical Office, CSO) back in 1941 during WWII
- Regional statistics are back! If you are a frequent ONS user, you might have noticed that the Regional Trends ceased publication in 2011(sad time). The Regional Statistics now has got its own dedicated page, and in particular, there is an infographic featuring Employee Growth by region and industry in 2013 (Manufacturing Investment data is back too under Business Investment Quarterly release)
- ONS is planning to launch Outward Foreign AffiliaTe Statistics (OFATS) in early November. The set of statistics will monitor the degree of globalisation for UK businesses across the world, giving users valuable information on labour and turnover of UK-owned overseas affiliates.
- Appetite to “hack” the ONS data yourself? Accountability Hack day is for you. It is a two-day event which lets the public hack into National Audit Office, ONS, as well as Parliamentary information. It welcomes all developers, auditors, as well as just ordinary people! Go register yourself and friends and family now!