The devastating fire at Grenfell Tower, which killed 71 people and caused £7.6bn in economic loss, has prompted an urgent review of the UK’s combustible cladding system. This is precisely the sort of hazard the manufacturers of shoddy insulation or cladding could have anticipated.
The building sector now faces an important debate about how to improve fire safety, not least when dealing with new-build homes. Manufacturers of combustible cladding have become adept at keeping a low profile — one has even edited it out of an excellent DIY guide on the repair of cladding that is available on its website. Nonetheless, they’re clearly aware of the threat. Not so long ago, they risked coming under severe regulatory scrutiny. But, ironically, at a time when their factory-made products are being rendered useless, their active focus on the markets outside the UK is paying dividends.
This boom in production of cladding is playing a significant role in Britain’s manufacturing revival. Outside Northern Ireland, production of cladding has increased more than sixfold over the past year. Around two-thirds of UK cladding exports go to the US.
Since the economic downturn, UK manufacturing has struggled to recover to the levels of the last decade, owing to falling demand for textiles and computer components. But manufacturing has managed to stay profitable — although a weaker pound is both advantageous and problematic at the same time. The UK’s subdued manufacturing output this year, following the Brexit referendum, was accompanied by a notable slowdown in the expansion of global manufacturing, after three years of industrial expansion.
Only among synthetic rubber and plastic products, new high-value manufacturing has remained buoyant. Unsurprisingly, after Brexit, more manufacturing companies have decided to move to other countries to benefit from the exchange rate. The UK, in contrast, still depends on North America as a key market for its exports of these products. The sterling weakness that we’ve experienced over the past three years seems to have been more than offset by the depreciation of the US dollar and the euro. This has proved to be a key factor for manufacturers in other countries.
So, if manufacturing is in its infancy in the UK and the UK is potentially unable to take advantage of free trade agreements to export its goods, manufacturing growth in the UK could well decline in the next decade. A key focus for government should be on strengthening the manufacturing sector and expanding the UK’s access to new markets, especially for chemicals, pharmaceuticals and advanced technology industries.
So why has manufacturing become increasingly attractive? One reason is the consumer. Manufacturers are in the vanguard of the smart home revolution, in which innovations in customer experience and technological advances are significantly changing shopping and lifestyle. The sector is also one of the UK’s major exports. The Far East is starting to discover British chemicals and UK-manufactured performance materials. These are in demand by international manufacturers across their supply chains.
Our manufacturing sector has grown thanks to a greater willingness on the part of policymakers to co-operate in the development of new ideas and technologies. We also need to keep the issue of R&D spending on the policy agenda and build on the UK’s success in securing support for UK-led ideas.
Perhaps most importantly, manufacturers need to sustain high levels of industrial discipline to improve their competitive position. UK-based manufacturers are less likely to have the infrastructure in place to retain skills and improve productivity. We need to think seriously about how to better attract employers into the manufacturing sector, as well as ensuring the UK retains the number of young people who want to do a trade.
Having more profitable products available and more reliable markets has helped many manufactures through difficult times. These successes also mean that manufacturers are well placed to benefit from an expansion of exports to be secured from overseas markets when uncertainty about the shape of the post-Brexit relationship between the UK and the EU lifts.
In the years ahead, there may well be a case for attempting to sell a new version of industrial policy. Companies that are involved in manufacturing today will need to play a role in nurturing their sector for the future.
The writer is editor of Index of Industrial Progress