Is Dylan selling the Tories short on manufacturing?

DYLAN Jones-Evans’s blogpost of last Monday (sorry, but it is Christmas) makes for an interesting read. The Prof takes firmly to task those who argue that Labour has spent much of its time in power repairing the economic damage done by the previous Conservative government. Indeed, says Dylan, Labour’s record is far worse that that of John Major’s administration of 1992-1997.

And it is on manufacturing that DJ-E finds the comparison most stark. According to his analysis:

Contrary to the myths that are peddled about how the Conservative Party destroyed the manufacturing sector in Wales, the statistics show that the relative importance of manufacturing to the Welsh economy actually rose from 27% to 28% during the last Conservative administration between 1992 and 1997. In contrast, it has declined to 18% of the nation’s economic output since Labour came to power in 1997.

This is all undoubtedly true, as this page from StatsWales shows (you’ll have to put the date range in yourself to generate the series) but it does beg the question as to why three Labour government should be compared to just the one previous Conservative administration, particularly when it is Margaret Thatcher and not John Major’s government that is frequently blamed for Wales’s economic woes? Accordingly, if you go back to 1989 (the first year for which directly comparable data exist) the picture is slightly different, with manufacturing in Wales declining from 31% to 27% by 1992 before recovering to 28% by 1995 and then beginning its decline to the 2007 figure of 18%.*

So is this a case of being slightly tricksy with the date range? After all, if you pick the period straight after the previous recession, it is likely to show a recovery, and if you avoid the period in which the damage is alleged to have been done the conclusion will be rosier still. Perhaps not, because if we delve into the manufacturing stats going back to 1979 some surprising conclusions emerge.  According to the Welsh Index of Production and Construction (see table 2.6) Welsh manufacturing did decline sharply from 1979-1982 (i.e during the recession before the previous one) but by 1987 had recovered to its former significance before holding steady until the mid 1990s, at which point it rallied slightly (see above).  Wales’ overall productive base was eroded markedly during this period (see table 2.7) but this was because of the decline of the coal industry.

It would be easy to assume that the relative weight of manufacturing in the Welsh economy increased because of this decline, i.e that manufacturing became a bigger part of a smaller cake. So it is worth also looking at Table 2.8 from the above link, which does a good job a tracing capital investment in manufacturing over the period. It shows a sharp fall during the recession of the early 1980s, followed by a steady to strong growth in the latter part of that decade, which rises to something like a surge in the early 1990s, followed by a slump when the effects of that latter recession worked their way through. Whatever your views on the cyclicality of these figures (and the phrase “boom and bust” springs to mind) it is clearly not an inexorable erosion of Welsh manufacturing. It is worth noting, however, that Table 4.5 in the Digest of Welsh Historical Statistics (link here) shows a decline in employment in manufacturing over the period, with around 80,000 jobs lost in the recession of the early 80s, followed by a minor rally to the early 90s (around 20,000 jobs added), followed by another slump.

So the story of Welsh manufacturing during the Thatcher years is not a straightforward narrative of decline any more than it is during the Major years. Conservatives might feel they can point with pride to a longer period than 1992-7 to demonstrate stewardship of the Welsh economy, while Labour will certainly feel that the drop in employment bears out their critique. In either case, it’s worth looking back beyond 1992.

* There is a further question about whether DJ-E’s contention that a big manufacturing sector ought to be the basis for a modern economy is right; the figures show the Welsh economy over the period beginning to resemble that of England’s more closely, with a richer mix of other activity such as financial services. That has been the avowed aim of successive Welsh Assembly Governments since 1999, and with good reason.