An Unbalanced Economy

When I was a young man I was attracted to engineering as a career, there were many interesting and challenging developments and problems to solve which were often of a scientific nature and many engineers were effectively ‘applied scientists’. Many of these developments had arisen within the defence industry, particularly in the aviation field. As a nation we were proud of our engineering achievements, we led the world in gas turbine technology, our jet aircraft were setting records, we had our own atomic bomb, we led the world in atomic power technology with the world’s first nuclear power station, we had pioneered the use of radar and built the world’s first electronic computer. Most of these achievements were the result of government funding, private companies profited from government contracts, there was not too much pressure for these companies to be commercially viable so that they were slow to make the most of the commercial potential of their achievements and had a reluctance to invest for long term benefit. An example was Armstrong Siddeley who had the ‘Sapphire’ which was probably the best British jet engine at the time (and therefore the best in the world). The Americans were aware of its potential and wanted to buy 500 engines, Armstrong’s considered the investment required to build that number and decided they would rather sell the rights for the Americans to build them and in one move they gave away the technical lead that they had. Of course all this government funding in the 1940s/early fifties was a continuation of the procedures during the war, the war was over but they were slow to realize that we could not afford to go on in that way, we could not afford to have four or five companies designing and building different aircraft to meet one specification and things slowly changed. We did have some commercial successes in the aviation field, the Vickers Viscount with Rolls Royce turbo prop engines, was just right for the time and was a great aeroplane, the de Havilland Comet was outstanding and would have been a great success story but for the tragic failure due to pushing the boundaries a little too far. The government super tanker did slowly turn round and it was recognized that we had to earn our living, ‘Export or Die’ became a slogan. Some of our industries did rise to the challenge, in particular the motor industry did well and we had the second largest motor industry in the world, second only to the USA. They did export cars all over the world, export took priority, there was a long wait for a new car at home. Most of MG production went to the USA, but to some extent the motor industry had it easy, Germany’s and Japan’s industries had been devastated, France and Italy were struggling to recover and the world was hungry for new cars. In fairness the cars were quite good in comparison with the competition, but because the competition was weak there was little incentive to make them even better. As we all know they were inclined to rust (as were the competition except perhaps for Volvo) and reliability was not all that it could have been. Unfortunately our factories were equipped with fairly dated machine tools that they had worked throughout the war, all over the country relatively small workshops were making parts for the motor industry on old machines relying on the skill of the workforce and their inspection procedures. We had too many motor companies producing too many models in too few numbers. Massive investment was needed but The City (and the management) were not sufficiently interested in long term investment, it was the current year’s balance sheet that mattered. At the same time the USA had become alarmed at Russia’s attitude and their aspirations to spread communism, and decided to rebuild Germany as a buffer. They poured aid into Germany helping them to replace their destroyed factories with new state of the art equipment. Similarly Japan also was seen as a potential barrier to Chinese communism. Perhaps surprisingly, there was no aid for the UK, rather there was even a reluctance to lend us money, partly due to their dislike of our Labour government, too near to communists for their liking. And so our industries had to struggle on and our motor industry was slow to react to the better cars emerging from Japan. The switch to a conservative government reduced the possibility of government help for manufacture, their position summarised later by Mrs Thatcher, who oversaw a further weakening of manufacture, and objected to ‘propping up lame duck industries’, even if they were not lame. It was fortunate that we did not have a conservative government when Rolls Royce overspent on development of the RB211, which was the first of a new breed of jet engines, and, with short term government help, went on to re-establish Britain’s lead in the field (Would that help have been permitted if we had been in the EU?). Successive governments saw the future in the banks and the City and cared less for manufacture. It is sad, our young engineers of the 1940s,50s,60s were finding their challenges in the products rather than the production, due primarily to a lack of real interest by investors or government, as a result we were slow to develop and employ automated systems and manufacture did not progress as quickly as it might. Now we have a seriously unbalanced economy with an overdeveloped financial sector (and we know how dangerous this can be), and a manufacturing sector stagnating at 10% of GDP. The government tries to reassure us by saying we are still seventh largest manufacturing nation in the world, after US, China, Japan, Germany, South Korea, France and Italy, but on a per capita basis we are around 24th. Manufacturing, farming and construction are the real wealth creators, the contribution of manufacture to progress is clear – computers, fibre optics, routers, GPS equipment, more efficient - cars, lighting and appliances, automated warehouses etc etc. Unfortunately, because our manufacturing is weak, much of this wealth is being created elsewhere. The financial sector is a wealth manipulator, looking for fast bucks, not interested in long term investment and taking pickings from wealth created elsewhere. Whilst it does genuinely provide a service it is grossly overpaid, it is fundamentally parasitic. We are told repeatedly that we have a strong healthy economy, but national debt continues to rise, and has reached frightening proportions, personal borrowing is at an all-time high due to ridiculously high housing costs, whether renting or buying, which is a result of government failure to intervene. It seems to me that there is a very high risk of another financial collapse, even a house price collapse. I can see little chance of the nation paying off its debt until manufacture generates a higher proportion of our GDP. Ron Watts