In the shops last week-end I looked at the labels of the merchandise. Some clothes shops were full of garments from China, interspersed with items from Malaysia, Viet Nam and India. They had nothing from the UK, nor from the countries of Europe that used to pride themselves on fashion and style. The electrical and household goods departments told a similar story, awash with imports.
It is the case we still have some good retailers. Some of the shops are owned by UK shareholders. They may be financed by UK banks. The truth is, the longer we run such a large balance of payments deficit, the more UK businesses will have to be sold to overseas buyers to pay the bills for our enjoyment of so many foreign products.
Some people say we cannot make things successfully in the UK any more, because wages are so much lower in Asia than here. They do not understand modern manufacturing.
The keys to success in modern manufacturing are quality and automation. The direct labour cost in many modern products is low. Materials costs are higher and rising, as China scours the world for ever more commodities. The costs of design, management, machinery and the supply chain are important. Employing fewer well trained people per unit of output is often the key to success. Because labour is cheap in Asia, Asian manufacturers often use it badly.
It is quite possible to make things in Britain, make them well and make a profit. The fact that so few do these days tells us something else. For all the fine politicans words about manufacturing, government often does not want industry. Planning controls, regulations and tax regimes are hardly encouraging. Nor is our culture any longer proposing we be the workshop of the world. In schools discussion is likely to be of pollution and industry’s large contribution to global warming, rather than to the importance and the rewards of making things for ourselves.
The UK seems to be happy to import its lifestyle from China and borrow the money. It has the added moral luxury that we can then blame China for the pollution she creates for us, and can enjoy the benefits of low wage labour intensive production. That does not require us to be mean to our UK neighbours over how much they are paid. We borrow the money to pay the benefits bill instead.
The gnawing worry I have is how much longer will China go on working so hard and lending us the money to live at such a higher standard than they enjoy? Isn’t it high time government turned fine words into less government action to thwart or put off would be manufacturers and investors who could start to get Britain working again? China doesn’t have the high corporation and income taxes we have, and it does not take months or years to get a planning permission.