UK Edition
For nearly five decades, manufacturing has been a fading force of Britain’s economy, but the Government’s new industrial strategy, driven by green energy and innovation, is a welcome sign that we are ready to reclaim our former engineering firepower.
Reviving manufacturing offers huge benefits to the whole of the UK. The decline of industry has decimated some of our industrial heartlands over many years and a rebalancing of our economy to embrace manufacturing again promises to rejuvenate places like the North of England, West Midlands, South Wales and Scotland.
The figures from the Office of National Statistics tell a sobering story. In 1970, manufacturing accounted for nearly a third of all the wealth created in Britain. Today the figure is a mere 12pc. The UK, once at the heart of the Industrial Revolution, seemed to lose its appetite for the heavy end of the economy as it haemorrhaged jobs in the foundation metals sectors and many areas of engineering; focusing instead on building its strengths in financial and other professional services.
It is not too late to reverse the trend. We’ve still got an abundance of industrial expertise on which we can build for the future. New technologies will also continue to demand a strong manufacturing base – driverless cars, as heralded in the Budget, still need doors and chassis like traditional motor vehicles.
The most encouraging aspect of the Government’s new industrial strategy, published yesterday, is its strong focus on low-carbon production. We welcome this vision of a thriving post-Brexit manufacturing sector in the UK, driven by new global export opportunities and the growing inclination of major auto, aero and defence and other equipment makers to secure their supply chains by sourcing more of their components at home.
As a business which is an intensive power user, we, at the GFG Alliance, have already recognised that finding a solution to the cost and secure supply of energy is at the very heart of any genuine industrial revival. By putting renewable energy alongside metal production, we have effectively forged a prototype industrial strategy of our own, which is thankfully reflected in the Government’s new blueprint for the country.
The relatively high cost of energy in the UK (when compared for example with German competitors who pay 50pc less) is the biggest impediment to the survival of metal production in the UK. That in turn undermines the downstream industries which depend on the supply of competitively priced domestic metals.
Our low-carbon approach also involves the use of sustainable raw materials in our foundation metals industries, particularly the recycling of abundantly-available scrap steel and scrap aluminium.
Supplies of domestically generated scrap steel in the UK are set to double from 10m to 20m tonnes a year over the next decade or so; a resource we need to make the most of.
With this powerful combination of green power and recycling, companies like ours are in an even better position to deliver transformational change, whatever the challenges are posed by Brexit. We have set a firm target to build recycling capacity to produce 5m tonnes a year of low-carbon steel, or "Greensteel" as we call it – the equivalent in weight to over 3 million average family cars. In addition, we are also working on lightweight and electric vehicle technology that would reduce fuel consumption on the road.
In a further contribution to this clean and competitive economy, we’ll soon have 1 gigawatt of green energy capacity in the UK, enough to power 800,000 homes in the UK, 13,400 Wembley Stadiums or 850 million kettles, with plans to add major wind power using turbine towers all made in Britain from low-carbon steel.
Britain still has many powerful industrial assets and we have multiple motivations to use those assets to revitalise our manufacturing base. The industrial strategy sets out the blueprint; businesses now need to harness the opportunity presented to ensure the future of manufacturing is bright and be ready to power the UK economy.
Jay Hambro is chief executive of SIMEC Energy and chief investment officer of the international energy, metals, industrials and mining group, the GFG Alliance
Green energy can power a new age of British manufacturing prominence