Meanwhile, an 11% fall in good paying manufacturing jobs
Good paying, skilled jobs are in serious decline across the UK’s Foundation Industries, according to a new study by Tata Steel. Chancellor George Osborne called for a “march of the makers” in his Budget speech 2011, as he identified manufacturing as the key growth sector for the economy. But the UK’s Foundation Industries, supplying essential materials to “strategic manufacturing and construction supply chains,” have suffered a steep fall in businesses, employees and gross value added through from the recession to 2012. BIS is developing strategic partnerships with key sectors including energy, construction and advanced manufacturing, “But these do not include the Foundation Industries,” Tata Steel Europe’s CEO, Karl Koehler, said. “If Government is serious about re-balancing the economy and creating sustainable jobs in the region, it must recognise the importance of the UK’s foundation industries.”
Foundation Industries: decline in businesses and GVA, 2008-2012
The Foundation Industries supply a wide range of products to the UK’s manufacturing sectors, ranging from iron and steel, chemicals, glass, ceramics and cement to wood, brick and other products. There is much overlap with the “energy intensive industries”, which have high energy costs in common. Tata describes the Foundation Industries as follows:
- 31,400 firms employing 487,000 people
- 17% of manufacturing GVA, greater than the UK economy as a whole.
- 17% of manufacturing investment in 2012.
- More training days per employee (11) than other sectors.
- 30% of total UK exports and imports of goods in 2012.
But the trends are worrying. As the chart above shows, the number of active businesses and their GVA is in decline.
Employment also fell 11% from 2008-2010, more than manufacturing as a whole (9%).Minerals sectors like glass and cement experienced the largest decline (34%) whilst wood and wood products suffered the smallest fall (4%).
The study confirms our research that base electricity prices for Energy Intensive Industries in the UK are higher than in France and Germany (but lower than Italy and Denmark); and significantly higher than in Russia and USA. Government policy in relation to climate change has a profound influence on the price of energy and carbon reductions, and, therefore, potentially affects the competitiveness of the Foundation Industries. The study does not assess the government’s £400m compensation package for the energy intensive industries, the subject of new TUC research to be published in March 2014. But it is evident from Tata’s report, which uses the word “support” 50 times, that the industry is calling on a far more ambitious and coordinated partnership with government than currently available. At present, the key focus for work on the energy intensive industries (EIIs) is through a hard working task group of the Green Economy Council. In Building our low carbon industries , the TUC made a similar plea for a far more comprehensive, Minister-led strategic partnership for our core industries.
The Business Secretary acknowledged the challenges facing these industries during the report’s launch at London’s Shard building, that energy costs were a problem for industry. “We have to address the problem. This industry wants substance and engagement, and they have got it. There is a difference between tokenism and real engagement.”