Leading Article: Management on the line

Click to follow
The Independent Online
THE LITANY of lost jobs in famous manufacturing companies reverberates depressingly through the media. On Wednesday British Aerospace, one of Britain's largest manufacturing companies, announced the closure of its plant at Hatfield and the loss of 3,000 jobs. Yesterday it was the turn of Rolls- Royce Motors (950 jobs) and Ford (1,487); in August, BP, Jaguar and Swan Hunter, the shipbuilders, announced large cuts.

Much of this mayhem is attributable to the recession. The losses must also be seen in the context of the long-term shift, common to all advanced economies, from the industrial to the services sector. Many redundancies can be put down to improved productivity and efficiency. Statistics are also deceptive: much employment in manufacturing industry involves clerical tasks, catering, public relations and so on. Some of these are being contracted out.

In the Thatcher era it was often said that it mattered little whether the country earned its keep by selling manufactures, or by services such as insurance and tourism (now, incidentally, France's biggest industry). The disappearance of metal-bashing was seen as a sign of sophistication: let the newly industrialising countries produce such crude objects as ships and sheets of steel, went the argument, while we concentrate on insurance, computer software, tourism and the like. This was to assume that the relentless post-war shrinkage of manufacturing in the major Western industrialised economies could be continued indefinitely without damage: services in the United States, Britain and France now contribute just below 70 per cent of gross national product; in Germany and Japan, where they are very much less efficient than in Britain, the figures are 59 and 55 per cent.

Recent experience has shown that the two sectors are intimately connected. The decline or death of an industry inevitably affects all sectors in the area, not just those that helped to supply the manufacturing companies. Moreover, a larger proportion of manufactured goods is exported, and the sector is crucial for our balance of payments and hence our overall economic health. Yet the prospects are far from bleak. Thanks to huge Japanese investment, notably in motor manufacturing but also in electrical and electronic goods, Britain is set to become a net exporter in sectors that have bulked large in the trade deficit, including cars.

For the economy as a whole, it is not the number of jobs in manufacturing that matters, but the output, productivity and competitiveness of the factories. Ten years hence, a significantly smaller industrial workforce could easily be producing a higher proportion of GNP.

The British weakness, to which many oft-

rehearsed cultural and historical factors have contributed, has been its failure to make enough products that people around the world want to buy, be it because they are indifferently designed, finished or marketed. Japanese companies in Britain, with their astonishing quality control and 'lean' production techniques, are producing a change in managerial thinking. But our competitors are latching on to it, too. The challenge is, at bottom, to management. The real debate should not be about the balance between manufacturing and services; it should be about how to improve our performance in both.