Hot air is the UKs main industry

Discussion in 'Current Affairs, News and Analysis' started by Wench3000, May 18, 2007.

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  1. Money money money money.

    whilst other nations may have the larger manufacturing bases etc etc, it is mostly done off of credit and/or financial instrumentation set up and administered in the UK.

    For instance. Shipping. Responsible for moving 99% of all the worldwide cargo. Mainly financed out of london, with resources deposited here by owners based worldwide.

    I could go on. Youve got shares, leveraged debt, risk management, export credits, futures, bonds, metals, aggregates etc etc.

    Fair enough we may not produce much in this country (although BAE, Westland, Cummins, CAT, Honda, Vauxhall, as well as all the software and IP producers in the numerous universities may disagree) - but we manage the accounts for most of the world outside of the US.

    Also, its a very, very outdated way of looking at exports to say that you need to have a physical good to sell. Name three of the biggest companies in the world - TimeWarnerAoL (IT, Magazines), Microsoft (IT), Pfizer (Medical, patents). They dont build much, or take big factories - their value is in their intellectual products and licences.
  2. The article is bang on. We can't survive in the world market by polishing each others shoes and buying houses for ten times what they are worth.

    A nation of telephone sanitisers?

    Nothing else has the "value added" effect of manufacturing.
  3. Also Germany has always been one of the largest exporters in the world. It was set up after the Marshall Plan to be self sustaining and self financing. To be self financing (and therefore less of a burden ot the UN at that time) it needed to be a leading exporter. This process has just carried through to the modern day.

    Ref Japan - they have lost their edge in any case. Their 'revolution' was in manufacturing incorporating robotics, which is now a mature industry, studied worldwide. Their current manufacturing base is supported by an interest rate that is in real terms, negative.

    Annnd something else whilst im pontificating. The interest rate is so cheap in Japan, that many of the hedge funds and banks borrow yen, convert to dollars or sterling, and then lend that money to the UK and US at higher rates. If Japan increases if interest rate, the banks profits are slashed dramatically, and they put up interest rates to the rest of the world.

    Ergo, watch Japan.

    France produces bugger all apart from Cheese and hot air.
  4. Whilst you make the point that accounts dept of UK PLC has a world class position and does bring in a profit 'Daede'!

    the manufacturing section has been dangerously run down! and in some cases completely disbanded and sold off, but without any real replacement for the workers?

    Not everyone can work in the city and not everyone has the capital the market and the werewith all to be self employed!

    case in point i cannot complete with china, and the practical market for my goods localy is not wealthy enough to support high manufactured high value goods!
  5. Halo - appreciate your point, but it all depends on whether you believe in a market economy or not.

    If your goods arent being bought by your local market, then theory (and life) dictates that there isnt a market for them.

    With regards to manufacturing being 'run down' - if it is costly, innefficient and isnt competing on a global scale, then why should it be subsidised by the tax payer?

    Look at Rover - nice cars, sold at a loss for years, subsidised and eventually shut down. Now around the site, you have a huge number of cutting edge engineering firms exporting their knowledge in design and fabrication around the world. You only need to look at any kind of motorsport to see that the engineering is predominantly run by brits.

    Another case in point - the oil and gas market. Dominated by the USA and Norway, however we still have a vibrant market, supplying advanced engineering, modelling and 'high end' supply services. Practices developed on the North Sea for well production and stimulation are being exported worldwide,w ith the result being more oilfields coming online overseas.

    I always listen to people complaining about the decline in manufacturing, but twenty years ago it was the coal mines, and twenty years before that it was the huge influx of manual labour from the demobbed forces, and twenty years before that it was the great depression.
  6. Andy - oil companies values are cyclical.
    14% of the worlds oil reserves are controlled by oil companies, the other 86% by national oil companies (Saudi Aramco, PDVSA etc etc).

    As oil reserves fall (or oil prices rise) governments will take a higher percentage of earnings as tax per barrel, or will straight nationalise the fields with SLA's to the oil companies.

    You are already seeing a repositioning of the European Supermajors (BP's new slogan is Beyond Petroleum, Shell is now the biggest investor in the world in offshore windpower).

    Car companies are only the largest by retained asset value - they own big factories, on lots of land, with lots of metal. These were typically bought 20 - 30 years ago, when prices were a magnitude lower.

    Also bear in mind with asset heavy companies, they value their own assets. Often these values are inflated to suit whatever borrowng that company has - it is the equivalent of you saying 'i need to borrow another 15 grand. right, change the house price up 15k, then issue shares / debt against the new value'.
  7. And more to the point, the Fortune Global is calculated off of balance sheet values, which can be 'tweaked', for better or worse.
  8. What we are witnessing is a transfer of economic power from West to East. China and India are the world's manufacturers and in a free market this would always happen as wages were too high in the West and too low in the East. The East is playing catch up and eventually their wages will be on a par with ours.

    The only real way to produce wealth or money is to take raw material and process it - i.e. add value. Financiers do not produce wealth and manufacturing is always the hub of the economy and provides growth. This is an old fashioned opinion but I believe it nonetheless.

    It will not happen overnight but eventually Chindia will achieve economic superiority - the problems will really happen when they want political superiority!
  9. Indeed the market economy is a vital part of industry and commerce, however I belive it has too be tempered with national interest also!

    This is true, but I don’t expect that constant diversification to chase a market is sustainable by all business as a profit model let alone the retooling reinvestment need too diversify in some cases!

    I firmly believe that government just throwing subsidy after subsidy towards business is both foolish and a waste of tax revenue, but tax revenue has been raised to support the country is it not! Therefore intelligent use of government funding towards business is vital.

    As an example and as I live in the SW farming were has been the dominant industry here, our farmers cannot it seem compete on a global scale should we let them become theme parks and become totally dependant of foreign food imports?

    Without a doubt we are still at the cutting edge of development in this and many fields but the tiger economies are studying our methods and will move too supply there own experts as they have done with much manufacturing!

    I being of mature years ‘sighs’ have seem much change in both the private and public sectors, I have seen the fall of industrial Britain, and while the world of business never stands still I don’t believe we can sustain growth on just the city and a few top level niches!


    edited for mongo editing :oops:
  10. Daede,
    Don't you feel that having the City of London as the only driver of the economy over exposes us? That investment in true human resources, real education, degrees and the sciences is a must if the City is to remain as the engine for the economy. That to seemingly neglect manufacturing removes any depth the economy may have.
  11. The West still has the edge in engineering and technology but the East is now producing many graduate engineers - we produce many fine Media Studies graduates! Eventually Chindia will overtake us in this area as well.

    After leaving the army I worked in manufacturing for many years as a project engineer and have witnessed its demise in the UK (and US). I now run a steel fabrication company with most of my customers in the construction industry. I have adapted and even though my company manufactures I actually class it as a construction subcontractor. We have adapted to survive - many others did not.

    Manufacturing in the past allowed the working man increased wages - as is happening in Chindia. In the West the working mans wage has been at best stagnant (allowing for inflation) for the last few years.
  12. I have to say that this is so true my field is fashion and graphic design at uni i nealry half of my class was from mainland china and were here to study and looking foward to returning home too work in the top layers of their manufacturing industry, engineering and the sciences are aslo following this trend!

    here lies the rub whilst we strive to keep our labour costs down by holding down wages, this reduces the disposable income to keep our economy bouyant. :(
  13. Is the issue whether you are manufacturing or not a bit of a red herring? Surely the issue is whether there is a positive contribution to the balance sheet of UK plc. If it be making saleable goods or selling a service ABROAD then the contribution is positive, if it is just recycling money within the UK then the contribution is neutral, but if importing either service or goods then the effect is negative. Hence the balance of payments is a paramount indicator of the nations financial health.

    If money is trapped inside an economy or more is earned from external sources and placed into that economy the ecomomy grows, but if money comes out then it contracts. Where the UK has problems is that whilst the economy has apparently grown it has done so on the back of higher goverment borrowing and windfall taxes. It is not a sustainable position.