The Journal article 17 April
This article by Graham Robb was published in the Newcastle Journal:
We don't need to do anything clever, just invest in making the things we all buy
We are in another two weeks of landmark economic news in the North East - a projected 1000 new jobs from OGN manufacturing wind farm turbine piles in Newcastle and the re-firing up of the blast furnace at the Redcar steel plant closed under the last Labour Government. We also had the formal announcement of Nissan's plan to invest £127m in the Wearside plant to build its latest hatchback. The announcement was made by the Prime Minister during a visit to Nissan's headquarters in Yokohama, Japan. The latest jobs calculations suggest 255 direct jobs and 900 supply chain jobs from Nissan. All these massive projects have been backed by taxpayers' cash from the Coalition Government.
This hat-trick of good news is, in some ways, more important than the 'rear-view mirror' UK growth figures which will be published next week. They will be used to determine if the Government is on track to grow our economy and there will be lots of fierce arguments over the smallest percentage in the data.
However, I have begun to wonder if these figures are as important as they are made out to be. I want my own business to grow, but only at a profit. The old saying is as true now as it has ever been: "Turnover is vanity, profit is sanity but cash is King!"
In business I'm looking for a cash surplus. And so should 'Great Britain Limited'. Surely, this makes our balance of trade, not the growth figures, the most important economic indicator. In the North East we really are top dog in this respect. Our export growth continues and we still export more than any other part of the UK. The Nissan investment proves there is an appetite from business to export even more.
I bought a new tumble drier recently. In the electrical superstore I needed to ask which one was British. They found one - a 'White Knight' model - it was competitively priced and had all the correct functions. It had a Union Jack logo, was made near Halifax and I saw no reason not to buy it. Everyday goods like this are too often imported. It's great that we make high end products for export, but we also need the basics for our own market. If a British firm can make a competitive tumble drier why not a washing machine, fridge or TV? It has been 20 years since we vacated this sector of the market, isn't is worth another look?
One man who believes that import substitution can help our economy is North East manufacturer John Elliott. He's an old friend from the NO to Regional Assembly campaign and he founded UK manufacturing firm Ebac, which makes domestic dehumidifiers and ubiquitous office water coolers. He believes the trade deficit is so important he has launched a website - www.stopgapuk.co.uk - to promote his new Stop Gap campaign.
The total trade deficit rose to a monthly figure of £1.76bn in the last year. Only by placing manufacturing back at the heart of the economy can this be reversed. We don't need to do anything clever, simply invest in factories that can make the things we all buy. Importing goods from China may give us cheap goods today but is disastrous in the long-term.
Take my tumble drier; if it wasn't made at all in the UK what is to stop importers from increasing prices as competition dries up, transport costs rising and Far East economies becoming more wealthy? This is already happening to minerals such as oil; it won't be long before our imported manufactured goods rise in price too.
That is why I'm pleased the Government is trying to rebalance the economy. Enterprise Zones offer serious incentives for new factories and the Regional Growth Fund is targeting manufacturing in our region. The aim is good, but the resources are limited and the rules on state aid are tough.The UK Government should interpret them as loosely as other countries do and continue its policy of backing manufacturing by whatever means are at its disposal.
My own firm is not in the manufacturing sector but it will grow because of it. The argument, put by Labour, that the region's large public sector base created jobs by injecting public sector workers' spending power into the economy is more accurately applied to our manufacturing firms. The last Government sprayed the cash at public sector agencies, but allowed steel plants and micro-processor factories to close. This Government has less money to spray, but is targeting at the right sectors. I hope more landmark announcements will follow and the rising tide of manufacturing and exports will lift all the region's businesses.