Business Comment: Terry Murden

Faster, quieter, longer, but not built here

Hitachi trainsCelebrations have already begun to mark the arrival in two years time of a new fleet of trains on the ScotRail service. They will be quieter, faster and longer. But they won’t be British.
Scotland, like the rest of the UK, is steadily distancing itself from building or operating anything home grown. From 2017 rail passengers will be served by a Dutch firm operating Japanese-built trains.
How many former rail workers will watch wistfully from the windows of the high rise flats in Springburn as the first Tokyo-engineered train makes its way past the old St Rollox locomotive works?
Rolling stock maintenance still takes place nearby, but the bulk of the site lies buried beneath Tesco, Costco and Lidl.
Manufacturing still has its place in Scotland and the UK, but a country known as the “cradle of the industrial revolution” has for at least two generations developed an on-off relationship with the business of making things.
Politicians like to talk about building the economy, but little effort seems to go into ensuring it is built on domestic foundations.
The lead partner in building the new Forth bridge, supposedly a symbol of Scottish endeavour, is Ramboll, a Danish company, in a joint venture which also comprises Grontmij and Leonhart Andra und Partners, which I’m guessing are not British. They are working for Forth Crossing Bridge Contractors, a consortium of Hochtief, Dragados, American Bridge International and Brit-firm Morrison.
The approach sections are being built by Cleveland Bridge in Darlington, famous for building the Tyne Bridge and Sydney Harbour Bridge, but otherwise the work is truly an international effort with 149 segments of bridge deck constructed in China and Spain.
Another big favourite among politicians is the renewables industry, but the windmills that are scattered on land and sea are mainly built in Europe and there are few indications that foreign manufacturers are rushing to Scotland to have them built locally.
How different this is to the influx of electronics companies in the 1980s and 1990s. Twenty years ago the American and Japanese electronics pioneers allowed Scotland to boast of building a rival to the still nascent Silicon Valley in California. Silicon Glen was home to a computer industry with an annual output which at the time was four times bigger than the scotch whisky industry, and employed three times as many people. It accounted for nearly half the UK’s total computer exports.
Now it builds none.
Of course, some new manufacturing has emerged to replace that which has been lost. It is smaller in scale, and more knowledge-based. As reported recently, 6% of the jobs now being done in Scotland never existed 25 years ago. Software engineers and digital operatives have replaced circuit board makers and, before them, legions of metal bashers.
While lamenting the decline of manufacturing, it is wrong to write its obituary. As stated above, the nature of manufacturing has changed as it has always changed since the farm workers first fled the fields for the factories in the 18th and 19th centuries.
It does, however, flirt with becoming a fringe activity. In the 1970s it accounted for 25% of the British workforce. It is now less than half that figure. According to statistics compiled by it makes up 54% of UK exports and the country is still the 11th biggest manufacturing nation in the world. The FT, however, has Britain as 9th biggest as recently as 2013.
The positive news is that the UK ranks second globally in aerospace manufacturing and in the half-year from January to June 2014, the UK-based car industry had its best year in new car sales in 9 years. The chemical and pharmaceutical industries add £20m per day to the UK balance of trade.
Compiling stats is a cursed exercise. For a start it is not easy to reach consensus on what constitutes manufacturing. Media reports still tend to revert to images of helmet clad welders rather than computing engineers.
Many of the services which would once have been considered part of manufacturing, such as catering, cleaning, building services, security etc, are now allocated into different areas of the economy.
Train building, however, is most definitely manufacturing and a country that once built the lion’s share of the world’s locomotives now imports them.
Dutch rail operator Abellio, which begins its 10-year ScotRail contract on 1 April, has signed a contract with Hitachi Rail Europe to build the 46 three-car and 24 four-car AT200 EMU units.
The first seven trains are scheduled to be built in Hitachi’s Kasado factory in Japan, with the remaining 63 constructed in Newton Aycliffe, County Durham, though in reality they will be assembled there, not manufactured.
With no sense of irony Scotland’s nationalist government transport minister Derek Mackay, launched the new deal by stating: “With the new ScotRail franchise, a number of impressive infrastructure projects and these slick new trains, we are giving Scotland a railway to be proud of.”
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