Following my Q&A with the CEO of HVMC, Dick Elsy, in March 2018, Oxford Economics and the MTA released their study on The True Impact of UK Manufacturing. Backed by Dick and the HVMC, the report contends that in reality, Manufacturing makes up 23% of the UK economy. On this basis, it supports 7.4m jobs. This is significantly higher than the 2.6m jobs and 9% contribution to GDP calculated via more conventional means.
You may, like me, question these figures. However, the study is the first to take into account the full impact of Manufacturing on the UK economy, not just the direct impact. Their study extends much further than Manufacturers themselves. It also includes the indirect economic effect of the ever-increasing highly complex supply chains supported by the Manufacturing sector, and the induced effect of the spending that Manufacturers’ wages create in the economy.
In summary the study found:
- The overall impact of Manufacturing on GDP was c.£446bn in 2016. This is significantly higher than the £177bn officially reported. The huge delta is because the official figures do not take into account the impact Manufacturing has on the Service Sector and various subsectors, such as Logistics, Research and Catering
- That Manufacturing accounts for c.60% of all UK commercial R&D investment and nearly 50% of all UK exports
- Manufacturing productivity was £67,000 per year, higher than the UK average of £56,700. In addition, the average salary in the sector is £27,400, 19% more than other UK workers
- That there was a significant economic impact from the engineering sub-sector (Metal Products, Electronics/Electrical Equipment, Machinery, Vehicles, and Transport Equipment). The direct impact on GDP was £67 billion, whilst the indirect and induced effect was c.£121bn. The effect on employment was as significant, with just over 1m being directly employed and a further 2m jobs being sustained by/within the supply chain.
