Stakeholders call for manufacturing security
Don’t we need to stop talking airily about “rebalancing” the economy and start talking about manufacturing in the terms we use for food or energy supply: manufacturing security?
Manufacturing security should be turned into an objective of national policy. It’s the central message from stakeholders who took part in the new TUC/EIUG study of our energy intensive industries, those heartland producers of iron and steel, aluminum, ceramics, cement, glass, paper, chemicals that directly employ some 125,000 people. They are at a crossroads of the government’s making: uncertainties over energy costs, carbon pricing, and public finance for new low carbon technologies persist. This study calls for government leadership in a new low carbon technology strategy to help secure their place for the long term public good.
There are a number of potential technologies that could result in significant decarbonisation of the manufacturing sectors – use of carbon capture and storage; industry process changes; and switching to biomass.
From a technology perspective, carbon capture and storage (CCS) offers the greatest opportunity for sectors like ammonia production, iron and steel production and chemical processing.
Three calls on government will help build a sense of manufacturing security:
Greater focus on industrial low carbon policy: companies interviewed for the study said there was too much focus on decarbonising the energy supply sector. More effort is required by government, for example, through its Green Economy Roadmap, in understanding how to maintain the competitiveness of the UK energy intensive industrial sector, whilst ensuring that it contributes fairly to the low carbon economy. Too much focus was being placed on power sector carbon capture to the exclusion of potential industrial applications.
Long term commitment: the Government must be able to demonstrate long-term credibility in the setting and enforcement of long term targets for cutting industries’ CO2 emissions. Given the uncertainty associated with technology development and costs, setting long term targets at the beginning of a decarbonisation process is a problem it hasn’t addressed.
Communal infrastructure development: The role of government in acting as a developer of the necessary shared infrastructure for low carbon power supply and CCS is crucial. Government should seek to ensure that industry CCS applications are not crowded out by the power sector, but jointly develop capture networks in core industrial areas.
With employment costs in excess of £3.8bn and total purchasing power of some £17bn, these companies make significant contributions in terms of direct regional employment and indirect economic value added through their diverse supply chains. From an innovation and value-added perspective, the energy intensive industries provide employment and training for highly qualified staff. A manufacturing job in the steel or chemical industries contributes around £70,000 per employee to regional gross value added (GVA), perhaps double the added value of retail or warehousing position, for example.
A key lesson from Bombardier, the train maker it has so far failed to support, is for government to factor in the long term economic, social and environmental contribution these core industries make to our low carbon economy.