Midlands manufacturing strengths make region key to increasing UK’s productivity

A new study from the Centre for Social Justice – Making the change: A plan to reboot British manufacturing and restore growth – says a revival of the manufacturing industry in the UK is essential if the government is to achieve its flagship ambition of ‘levelling up’ the poorest parts of the country. As the UK’s manufacturing heartland, this could put the Midlands at the forefront of the nation’s economic recovery.   

Low and stagnant productivity since the economic crash in 2008 is the underlying reason why living standards have barely improved over the past 15 years and are now in decline, according to the CSJ’s report published on 16 January.

How manufacturing boosts growth

It flags up that manufacturing accounts for 9% of the UK economy – down from 25% in the 1970s and urges ministers to set a target of raising UK manufacturing as a percentage of national output to 15%. It also points out that manufacturing jobs typically pay one pound an hour more than those in the service sector and – crucially – offer much more scope for productivity gains and hence higher wages. This is because the installation of new plant and machinery can raise output rapidly whereas this option is rarely available in service jobs.

Gavin Rice, CSJ Policy Director, said: “The reality is productivity growth is much more readily achievable in manufacturing industries than in services, perhaps with the exception of very high-value services such as the financial sector.”

The report’s central message is that only by solving the productivity puzzle can levelling up be achieved and regional inequalities reduced. And it sets out how manufacturing is a practical solution – to create jobs that are much higher paid than average, to increase opportunities across all parts of the UK, and to upgrade the country’s security and international competitiveness.

Diverse manufacturing opportunities in the Midlands

The Midlands Engine partnership’s own report – Midlands Engine Manufacturing Opportunities – published in September 2021, called on government and industry to capitalise on emerging opportunities within its manufacturing heartland to support the region’s and UK’s transition to net zero and deliver on the government’s vision to level up. It mapped out how the region can build on its rich heritage and current strengths, alongside developing technologies, to adapt and innovate in response to the challenges presented by post-EU Exit Britain and the climate crisis.

The Midlands is already a leading location for UK advanced manufacturing, with 25,000 businesses and 513,005 existing jobs in the sector, – 6.5% of the region’s total businesses and 11.4% of all employment, a much higher percentage than the national average. Our region is home to over 25% of England’s manufacturing workforce and manufacturing also makes up a higher proportion of the overall economy in the Midlands than the UK average.

Based on the region’s interconnected supply chains, academic expertise and current manufacturing specialities, Midlands Engine Observatory analysis has identified the key sectors with opportunities for growth in the region as: future food and drink, next generation transport, medical and pharmaceuticals, low carbon goods, and advanced metals and materials. The impact of grasping these opportunities – through investment, training and skills as the CSJ report suggests – could be worth an estimated 165,000 jobs and £13.7bn GVA to the Midlands by 2030.

As the UK looks to the future and seeks to build productivity and resilience,  it makes sense that the Midlands – a region with such strong manufacturing foundations and clear vision for coming opportunities – is once again putting itself at the centre of the UK’s economy.

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See the full CSJ report – Making the change: A plan to reboot British manufacturing and restore growth.

Download our Midlands Engine Manufacturing Opportunities report.

Read more stats on manufacturing in the Midlands in the Midlands Observatory Manufacturing factsheet.