As the UK has discovered, there is no postindustrial promised land

Anyone puzzled by Scotland’s increasing disaffection should take a look at a book called British Enterprise. Written by Alexander Howard and Ernest Newman, and published in 1952, the immediate afterglow of the festival of Britain, it consisted of short descriptions of each of more than 100 then world-beating British manufacturing companies.

It strikingly illustrates how much more geographically balanced the British economy was in those days. In common with latter­day Germany, every region of 1950s Britain had plenty of industrial prowess to boast of.

The Midlands had the British car industry, the world’s second-largest by total output and No 1 in exports. Wales had toys, steel, and domestic appliances; Nottingham had bicycles; Newcastle and Belfast led the world in key areas of heavy engineering; and, of course, Lancashire had cotton.

Then there was Scotland. Its roll­call of exporting titans included Renfrew­-based Babcock and Wilcox, which made boilers for the world’s power stations. Other major Scottish exporters included North British Locomotive and the William Beardmore castings company. In Dundee there was National Cash Register’s major British subsidiary and in Kirkcaldy the Nairn linoleum company.

The list went on and on, and at the top was the John Brown company. Although then one of the world’s most technically advanced manufacturers, John Brown is largely forgotten today. Its products, however, are not. They included the Lusitania, HMS Repulse, the Queen Mary, the Queen Elizabeth, the QE2 and others. John Brown was the cornerstone of a Clydebank shipbuilding industry that built nearly a ­third of the world’s ships.

All this was before the coming of postindustrialism, a superficially attractive but fundamentally disastrous intellectual fad. Espoused by London-­based elites in the 1970s and powerfully championed by Margaret Thatcher in the 1980s, postindustrialism postulates that sophisticated states no longer need manufacturing. Instead they should promptly move to a new promised land of postindustrial services.

Unfortunately, as the Scots particularly have discovered, there is no promised land. With the exception of Edinburgh, whose financial services industry is the UK’s second largest, the new postindustrial economy has proved no substitute for advanced manufacturing.

For Scots, perhaps the most obvious evidence of postindustrialism’s fallacies is in how the global shipbuilding industry has developed. As the Clydebank shipyards were closing a generation ago, Scots were told the industry was migrating to low-wage states and nothing could be done about it.

A generation later, the facts are in: shipbuilding remains predominantly a developed world activity and the world’s leading shipbuilders are based in places such as South Korea, Japan, and Scandinavia – states where, for the most part, blue­-collar wages are at least as high as in the UK.

Postindustrialists often suggest their opponents want to return to the 1950s. In reality, of course, that world is gone and nothing can restore it. But this in no way diminishes the case for manufacturing. The fact is manufacturing evolves and so do the companies which engage in it.

TakeToray of Tokyo. A humble maker of rayon in the 50s, it has long since graduated to higher things. These days it is noted mainly as a maker of carbon fibre, a hi-­tech material that is vital in a host of applications from tennis rackets to space vehicles. It is, for instance, the key factor in the superlight wings of Boeing’s 787, the most fuel-­efficient passenger jet in history.

Similarly, to take another impressive example, Zeiss of Germany has long since expanded far beyond basic photography. These days it is a dominant maker of high-­precision lenses for key scientific, medical, and industrial applications. This includes so-called steppers – photo-­optical machines that print circuit patterns on semiconductors.

The manufacture of each new generation of semiconductor requires more precise photo-­optics, which in turn means more precisely cut lenses. These latter can be almost as large as a car tyre and several of varying sizes are needed in each stepper.

Advanced manufacturing scores over postindustrial services in three key ways – jobs, exports, and wages. The jobs point is self­-explanatory: you don’t need a PhD to work on a factory floor. As for exports, manufacturing scores in part because – at least at the advanced end of the business – manufactured products need little tailoring for different foreign markets. This applies in spades in the case of the sort of sophisticated components, advanced materials, and precision machine tools on which the export success of nations such as Japan and Germany is based.

By contrast, in the computer software industry, for instance, the costs needed to adapt products for different foreign markets are generally incurred abroad and greatly cut into net export receipts.

Another key point is that advanced manufacturing is generally capital-intensive, thus each worker’s productivity is powerfully leveraged by the machinery he or she is working with. In some cases, the investment per worker may be as much as half a million pounds – an entry fee so high it guarantees that the only new entrants are in high­-wage nations.

Another plus is that advanced manufacturing involves industrial secrets acquired through years if not generations of learning ­by doing. Such secrets are typically known to only a few top engineers and cannot easily be reverse-­engineered by new entrants to the industry.

By contrast, services – even the most advanced – tend to be labour ­intensive and require little secret knowhow. Hence the drift of the computer software industry to India and Russia.

None of this is much of a secret in Japan, where I have lived most of my adult life. In fact it was in a Tokyo bookshop that I happened upon that book I mentioned. Its previous owner was, I imagine, a Japanese official or corporate executive who bought it on an information-gathering mission to the UK in the early 1950s.

He and his colleagues did their work well – so well that Japan is now a leader in virtually every industry that helped define British economic leadership in 1952.