There were mixed messages for the Welsh manufacturing sector this week.
In North Wales, 200 workers at the Air Products factory in Wrexham have lost their jobs as the company, which produces gas plant equipment, is moving to China.
At the same, Anglesey Aluminium has offered voluntary redundancy to 140 staff as they play a high-stakes poker game with the British Government to try to obtain cheap power for their plant.
If, as many expect, this fails to materialise, the result could be the final loss of 500 well-paid jobs in the poorest county in the UK – an outcome which could devastate the economy of Anglesey.
In other parts of Wales, there was better news.
Hundreds of jobs were saved when the Ministry of Defence awarded General Dynamics, based in the Gwent Valleys, a £231m contract to upgrade the Bowman military communication system.
In addition, Compact Orbital Gears of Rhayader, which manufactures and supplies high-quality engineered products and services, has safeguarded 25 aerospace jobs after winning three contracts in the past few months.
Given these different messages, the jury remains out as to whether manufacturing is recovering sufficiently, although it is clear that most of the effort is now going into safeguarding jobs rather than creating new ones. There are still worries over what will happen to some companies and their previous commitment to the Welsh economy.
For example, few believe that Tata will keep both of its steel plants open in Wales, which could mean a major blow to the economy if either Port Talbot or Llanwern were to close.
So what is the future for Welsh manufacturing?
The statistics show that the output from the sector in Wales has declined by more than 5% during the last decade, while most other sectors have grown.
In 1997, manufacturing in Wales was responsible for 28% of GVA (the index which tracks prosperity levels), but had fallen to 18% by 2006, the same as business services. In addition, there are over 60,000 less manufacturing jobs in Wales, with many more expected to be lost by the end of the year.
Certainly, the days of being able to attract large inward investment projects to Wales are over and our economy must adopt a very different approach if Welsh firms are to succeed in a highly-competitive environment.
The future of manufacturing will no longer be based on attracting jobs based on the lowest salaries, but on higher value-added factors such as skills, innovation and productivity.
That is hopefully the message that International Business Wales is sending out across the globe, and I was heartened to read that energy companies in the USA are expressing a preference for setting up operations in Wales because they want to work alongside our higher education sector.
At a time when every other country is looking to the world’s largest economy for any sign of new investment, we must take every opportunity to show that we have world-class opportunities and, more importantly, that we are ready to work with the best companies in the world to ensure that they invest in Wales.
One can only imagine the impact that investments from global giants such as Google or Microsoft would have on this nation and its ability to attract other inward investors.
You can just imagine firms across the world saying that “if Google and Microsoft have come to Wales, why shouldn’t we?”
We also mustn’t forget that we have an indigenous manufacturing sector in Wales that, despite the recession, has shown enormous resilience in surviving through the last six months.
However, this sector must now start preparing for the upturn and government, where possible, must ensure that when the time comes, Welsh manufacturing firms are equipped for the competitive battles that will resume once this recession is over.
If government is to intervene in developing our indigenous producers, then it must develop a coherent manufacturing strategy which provides more support for research and development, skills and new process technologies.
It must encourage companies to invest in capital equipment and the training that will improve their competitiveness and enable Wales to close the productivity gap with the rest of the UK.
Despite the decline in its relative importance, I believe that manufacturing has a vital role to play in creating a world-class economy in Wales.
However, we must take the sector more seriously and ensure that the resources are provided to close the productivity gap with our global competitors and ensure a high-technology, high-skills future for the manufacturing industry in Wales
Comments
OK - what price this "support"? How much will the Tories commit to this "support" financially?
You will not say will you? You will find another form of words to avoid actually saying how much the Tories will spend, on anything not just this. You have done it before when challenged.
However, if you do have the balls to say precisely what it takes financial for this "support", then I will take this accusation back.
Should you remain silent (as is your way), then you prove yet AGAIN, you just full of shit as usual.
In Wales we have the opportunity to truly embrace the spirit of innovation where a premium will be placed on the ability to design, develop and deliver cutting edge solutions to the environmental market.
With big expectations building up ahead of the December Copenhagen climate conference, we in Wales need to grasp the strategic initiative in these markets.
The start has to be in the school curricula and then through to FE and HE sectors. Are the courses now meeting the creative and lateral thinking skills needed to move quickly in design of new systems and materials?
NESTA is a great resource and the WAG needs to encourage more students to consider the entrepreneurial pathways where future markets lie.
If we are to transform Wales into a more entrepreneurial manufacturing country then the start has to be made in the education system, with lessons as early as Key Stage 3 in giving young people the confidence and sure-footedness to try new ways of discovering solutions.
For your information, we are actually costing the strategy now as part of the economic commission but you will just have to wait until the autumn like everyone else for the recommendations of the report. Indeed, it is not a matter of spending more money but just ensuring that the current budget is focused in the right places to grow the economy. However, given the mess that your lot have made of the economy and the total lack of vision for the future of this nation’s economic prosperity, that shouldn’t be too difficult.
David - thanks for your constructive comments - we will see if the 'green agenda' is something that will be supported by both business and government in Wales as there has been a lot of 'hot air' (excuse the pun) and too little action.
I have written on this occasionally during the last few years, but read the following article again and see where we have failed to encourage any real investments
http://dylanje.blogspot.com/2008/01/future-is-green.html
Perhaps Pathetic Labour Troll could explain why, under his party's control of a devolved body in Wales for the last decade that emissions have actually gone up in Wales and we have missed opportunity after opportunity to build a strong environmental products and services sector.
Manufacturing output fell by 0.5 per cent in May, more than reversing small increases in March and April and confounding analysts' expectations of a 0.2 per cent rise.
Thanks, Labour.