That the UK needs to manufacture more of what it consumes, to export more and import less is a message that I have and will continue banging home for as long as is necessary.
Government figures suggest that the total value of UK manufacturing product sales was £400.8 billion in 2021, up from the £366bn figure for 2020 but lower than the £402bn figure for 2019. However, the above figures are unreliable to the extent that we know that the combination of Brexit and Covid impacted to varying degrees and I venture to suggest that the figures for 2022 when they come are unlikely to show much if any improvement. We also know that the falling value of the pound sterling witnessed through the past year will have impacted negatively on the cost of imports of raw materials just as, in theory at leas and if we are competitive, it should be a positive in relation to export – all’s provided that the UK still has sufficient facilities and manufacturing capacity to meet potential for any rising international demand.
It is not all bad news and it would be remiss to ignore large international UK based companies such as Unilever, GlaxoSmithKline, Anglo American, Imperial Tobacco, Astra Zeneca, British American Tobacco, BAE Systems, Associated British Foods and Rolls-Royce who make up the top ten of our most significant manufacturing companies and that make a considerable impact to the UK economy, jobs, skills, exports and taxes they pay to the Exchequer.
Dependent on your point of view, the post important and successful manufacturing industries in the UK comprise those within food, drink, medical equipment, tobacco, paper, printing, publishing, textiles, aerospace and defence manufacturing and drug companies. To these can be added mining, quarrying, energy supply, water supply, waste management and last but not least, agriculture.
I have in the past written on automotive and which I have deliberately excluded from the above simply because, apart from Jaguar Land Rover. BMW Mini and Ford in relation to the engines and gearboxes it produces and exports, we have to recognise that with little in the way of having a UK supply chain, the majority of component parts used by companies such as Toyota, Nissan and Vauxhall to make cars are imported from abroad. Pleasingly, there are a number of smaller automotive specialist companies such as Rolls-Royce Motors, Bentley Cars, Aston Martin, Morgan together with Formula 1 car designers and producers, that are still very much British based and important in what they too bring to the economy. That said, I do not ignore that all the companies named above employ large numbers of jobs here in the UK and that behind the scenes there is a growing battery industry building to support the new generation of battery powered cars.
Behind all the very large and well recognised companies the UK is extremely fortunate to have another important list of major engineering-based companies. I have in the past written on the likes of Rotork, Spirax-Sarco, Cam Lock UK and others who, smaller though they may be, are no less important and are big exporters.
And then there are important defence related companies such as Babcock International, QinetiQ, Meggitt and vital UK based subsidiary operations of important companies such as Lockheed Martin, Raytheon, Leonardo and Airbus. Each and every one of these invests heavily in the UK are remains massively important to the UK economy, to maintaining skills and high-end specialist jobs.
In order to provide an excellent and specific example of this I would highlight an independent report published yesterday by Oxford Economics on the importance that Babcock International brings to the UK economy and jobs:
The research undertaken by Oxford Economics reveals the positive impact that Babcock International had on the UK economy through jobs, investment, and taxes between March 2021 and March 2022. The report highlights how Babcock is supporting levelling up across the UK by investing and supporting employment in the most deprived areas. It also underlines the critical role the company plays in the UK defence sector. Key findings in the report include:
Over £3.3bn directly and indirectly contributed to UK GDP
56,800 jobs supported across the country, with over 22,000 employed across some 264 sites, and a further 34,800 jobs supported in businesses across its UK supply chain.
For every £100 Babcock spends, and every 100 workers they employ directly, they support a further £198 contribution to GDP, and a further 158 jobs.
Babcock’s naval business supports a £2bn contribution to GDP, and 35,200 jobs, with 14,700 directly employed, and a further 20,500 jobs supported in businesses across its UK supply chain.
48% of Babcock’s UK workforce are highly skilled engineers and technicians. It also employs around 1,250 people on graduate and apprentice programmes.
£1bn spent with more than 5,700 UK suppliers, including £230m spent with 1,070 suppliers in deprived local authority areas, and £337m spent with 2,200 SMEs.
£770m directly and indirectly contributed to UK tax revenues.
The Oxford Economics Report found that:
Babcock International directly contributed £1.1bn to UK GDP, including £337m spent with over 2,220 SMEs, and over £230m in the country’s 20% most deprived local authority areas. Their extensive supply chain and employees supported a further £2.2bn contribution, equating to an additional £198 of GDP for every £100 spent by the Company.
Almost half of Babcock’s 22,000 UK employees are skilled engineers and technicians, including some 264 graduates, and almost 1,000 apprentices mostly based in naval engineering, support and systems.
New programmes aimed at recruiting and training lower- and semi-skilled workers, including NEET1s, are providing vital opportunities to those in the most deprived local authority areas in the UK, where 7.5% of the Company’s workforce currently live and work. Now, more than ever, investment in defence is essential, and Babcock’s naval business contributed £2bn to UK GDP, supporting 35,200 jobs, reinforcing its importance to UK shipbuilding. Major dockyards at Devonport and Rosyth helped to contribute £1.1bn and £370m to the South West and Scotland GDP, respectively, while supporting 19,400 and 6,300 jobs in those regions.
David Lockwood, Chief Executive of Babcock International said of the Oxford Economics report:
“The extent of our positive impact on the UK is evident in the amount we directly contribute to Britain’s defence capability, and the value this adds throughout our extended supply chain. We are helping create a safe and secure world, and this starts at home, with investment in the UK. Across the country, our most important investment is in our highly skilled people, and the findings of the Oxford Economics report show the significant impact we are making; our people support thousands of companies and jobs, throughout the UK. We are proud to be supporting the Government’s levelling up agenda, helping to spread prosperity across areas of the UK that have been worst affected by unemployment and the cost-of-living crisis”.
Ben Wallace, Secretary of State for Defence said:
“This report serves as a timely reminder of the contribution Defence Industry makes to UK prosperity. Our National Security depends on our ability to produce and support critical elements and capabilities onshore, but we also have a responsibility to ensure this investment unleashes the immense social value potential of the sector. I am pleased Babcock are taking a thorough approach to understanding their wider economic value.”
CHW (London – 16th November 2022)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785