Category Archives: Manufacturing

COVID-19 bulletin 30: post lockdown, government has the resources to invest and reflate the economy

Professor Sikka advocates investment to rebuild the economy of Britain, which entered the coronavirus crisis with poor social infrastructure and deep inequalities. Points made in two of his recent articles.

The crisis showed that the low-paid workers such as nurses, midwives, care workers, supermarket staff, teachers and bus and delivery drivers were the lifeline of society. Detailed figures for the cuts to the police and NHS are given in his May article

Treasury documents leaked to The Telegraph show a government blueprint for recovering £300bn of the costs associated with the coronavirus pandemic.

  • It lists government plans to scrap the triple-lock on the state pension the main source of income for many, which is around 29% of average earnings, the lowest among industrialised nations. The proportion of retirees living in severe poverty in the UK is five times what it was in 1986. So there is no economic or moral case for hitting retirees.
  • There is already talk of further wage freezes for public sector workers.
  • Influential think tanks like the Institute for Fiscal Studieshave called for a cut to the minimum wage.
  • The Social Market Foundation is urging the government to hit the state pension, already one of the lowest in the western world.

Sikka (right) describes the government’s post-coronavirus economic strategy as, “more austerity, hit the poor, cut essential services”. And continues:

We have the money to build a better society after this crisis: there is no shortage of resources

With record low interest rates, government can borrow to invest and reflate the economy – just as the economy was rebuilt after the Second World War – and the subsequent prosperity enabled governments to reduce the public debt.

He adds that the government can use its overdraft facility known as the “ways and means” facility at the Bank of England. The Treasury has used £400m so far and during the 2008 recession it used £19.8bn.

The Bank of England is using its £645bn quantitative easing programme, i.e. printing money, to support purchase of corporate bonds. The government could use the same process to bail out the poor by buying their debts.

Economist Martin Wolf agrees in the FT today: “It is equally vital to support the economy for as long as is needed to ensure a full recovery. Given the Bank of England’s welcome and sensible support, the government can afford to borrow on a huge scale and must be willing to do so”.   

Tax related measures advocated include raising additional tax revenues without increasing the basic rate of income tax or national insurance contributions. Investment in HMRC and curbing offshore tax avoidance could raise billions.

But corporations are already undermining our welfare

Sikka points out that the government has given billions of pounds to businesses in the form of business rates holidays, wage subsidies, cheap loans and guarantees; all without any obligations to safeguard jobs. This has freed corporations to reduce wages and cut or downgrade the jobs of workers; examples cited in detail in his June article relate to British AirwaysBam ConstructRyanairDaily Mirror, Daily Express and P&O.

Cuts to public services will damage the private sector which is the main supplier 

Wage and pension cuts will severely erode people’s purchasing power; they will not be able to buy goods/services produced by businesses and the economy will stall.

But the Conservative government – with its large parliamentary majority – is not in a mood to listen. Shall we on the left be able to reposition people’s awareness and press the government to change its policies?

The new economy must work for everyone, not just shareholders and financial speculators. Parliament needs to make the right choices and build a sustainable economy by investing, creating resilient public services and boosting people’s purchasing power. 

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Sources:

https://leftfootforward.org/2020/06/elites-will-use-this-crisis-to-reshape-the-state-we-have-to-push-back/

https://leftfootforward.org/2020/05/prof-prem-sikka-we-must-rebuild-not-tax-and-cut/

 

Prem Sikka is Professor of Accounting at University of Sheffield and Emeritus Professor of Accounting at University of Essex. He is a Contributing Editor to LFF and tweets here.

 

 

 

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COVID-19 bulletin 26: FT, “The pandemic risks delivering a knockout blow to globalisation”

This fear, expressed today by the FT’s editorial, will not be shared by some, who see globalisation as ”another version of colonialism or imperialism – with Amazons, Facebooks and Googles, Nikes and the garment industry in many aspects of their conduct as more acceptable looking British or Dutch East India companies” (reader’s comment). 

Manila port ‘bursting at the seams’ in the Philippines on Tuesday, March 31, 2020. Read more here.

Following an FT report of drops in rail freight and containerised exports from the UK of as much as 50 to 60% while imports are also declining, its editorial points out that supply chain disruptions and struggles to obtain medical supplies, have accelerated calls for countries and trading blocs to ensure they have sufficient capacity at home — prioritising resilience over producing goods where it is cheapest.

The US trade representative, last week hailed the end of “reflexive offshoring” (NY Times, log in) and in the EU Thierry Breton, the EU’s internal market commissioner, wants government grants, loans and direct intervention to build up European supply capacity.

The FT editorial points out that, in shifting manufacturing jobs out of rich countries and into poorer ones, globalisation reduced poverty in the developing world and prices in the rich ones.

But those working in these sweatshops (a small section of a sweatshop in Karnataka is shown above) still live in poverty and cramped conditions, working far from home in unhealthier conditions than the subsistence agriculture (Karnataka below) which was formerly their lot.

The low prices for their products in rich countries have encouraged a wasteful throwaway culture there, which has added to the waste mountains

The editorial also admits that millions in the ‘rich countries’ lost their jobs in the process, and lost the sense of pride and ownership people felt in their once thriving communities.

But the FT asserts that global supply chains and co-operation are a source of resilience, allowing countries to focus on their strengths and share expertise.

“Spreading people and factories around the world allows companies to guard against risks by diversifying”:

But it has also broken family circles and communities, increased deforestation and reduced the amount of land available for food production

“There will be higher prices and lost export markets”

But higher prices (due to higher wages) will mean a greater market for local goods and better tax revenues. A reduction in exports will lead to a great reduction in transport-related greenhouse gases.

“The direct cost to the taxpayer of subsidising domestic production . . . will make (economies) more fragile, not less”

But huge subsidies are currently given by government to foreign water, energy and transport utilities (including nuclear projects and fossil fuel producers) working in this country, to arms manufacturers and other exporters. That money could be redirected to domestic production which would reduce welfare payments and transport-related pollution.

It can be argued that a knockout blow is long overdue and that purposeful employment created by import substitution and Green New Deal projects might, in time, bring about an environmentally aware, low-crime, harmonious and employment-rich society.

 

 

 

 

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COVID-19 bulletin 3: medical and manufacturing unions appeal for desperately needed PPE kit

As two more nurses — Areema Nasreen and Aimee O’Rourke — died after contracting the virus, the BMA, the Royal College of Nursing, Unite and UNISON have issued a joint press release.

In it, BMA deputy chairman Dr David Wrigley said: “Doctors, healthcare workers and carers are risking their lives day-to-day in the battle against Covid-19. With Britain’s health workers enduring severe shortages and suffering a postcode lottery in the supply of vital protective equipment, the government has a moral duty to do everything in its power now to protect doctors and protect patients.”

         Workers who usually mint coins at the Royal Mint, Llantrisant, Wales, are now making medical face visors to supply health workers

In this unprecedented the unions, joined by industry federations ADS Group and the British Printing Industries Federation, say that manufacturing capacity currently furloughed or underutilised should be repurposed amongst the UK’s world leading manufacturers to produce the PPE kit desperately needed by the NHS, social care providers and other front-line workers across UK industry.

It continued: “Skilled workers are desperate to play their part, using their engineering and manufacturing expertise to ramp up production, under license from existing manufacturers that simply can’t cope with demand or secure essential supplies given the unprecedented demands on raw materials and components”.

Peter Lazenby reports that at Gaydon in the Midlands, vehicle manufacturer Jaguar Land Rover has already switched its prototype department to manufacturing 5,000 protective visors a week for NHS trusts. Read Read more on the JLR website. and in The Engineer

Engineers at JLR’s Additive Manufacturing Centre designed and manufactured the visors (Image: JLR)

Friday’s call across Northern Ireland saw over 100 companies responding positively to produce everything from hand sanitiser to medical scrubs”. Unite’s assistant general secretary for manufacturing, Steve Turner, said: “Government must now move from soundbite to action and put out a ‘call-to-arms’ to existing providers, materials suppliers and manufacturers. Temporarily addressing manufacturing restrictions based on copyright, patent or intellectual property, we could have a manufacturing army up and running, producing a range of PPE and essential supplies, in a matter of days.”

RCN chief executive and general secretary Dame Donna Kinnair (above) said: “Weeks into this crisis, it is completely unacceptable that nursing staff, wherever they work, have not been provided with PPE. I am hearing from nurses who are treating patients in Covid-19 wards without any protection at all. This cannot continue. They are putting themselves, their families and their patients at risk. We will not accept anything less than aprons, gloves and masks for all staff, in all settings. But this is a minimum — and that is why we are so disappointed that even that level of protection has yet to be provided.”

Downing Street confirmed on Thursday that more than 26.7 million units of PPE had been delivered to 281 NHS “trusts and providers” in England.

 

 

 

 

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Nationalise British Steel? A viable asset, essential to a decarbonised economy

 

Andrew Pendleton (New Economics Foundation) reminds us that since Margaret Thatcher first stood on the steps of Number 10 in 1979, successive UK governments have chosen to withdraw all but the barest bones of support from Britain’s foundational industries, of which steel is one. He questions whether any owner of steel manufacturers in the UK could thrive in the hostile environment UK governments have created.

Failed by the current government’s blind faith in markets, Pendleton writes,  the people of Scunthorpe and many other places have had no voice whatsoever in how the economy was run, until ‘the blunt instrument of the EU referendum’. The loss of this significant company will intensify the sense of loss that contributed to the Brexit vote

There are risks in selling to the Turkish Military Pension Fund or to the Chinese Jingye Group, about which very little is known, industrially, but the interest of foreign buyers suggests that British Steel is seen as a potentially viable asset.

Many tonnes of steel will be needed to build a cleaner economy – for wind turbines, electric vehicles and the rail lines made in Scunthorpe, critical to a decarbonised economy. As Pendleton points out, steel production is ‘problematic’ for climate change – but steel production in Scunthorpe can be ‘greened’ by investing to reduce its carbon emissions, eventually reaching zero as coal-free production (below) becomes the norm.

In Germany, Thyssenkrupp recently demonstrated running a steel blast furnace completely on hydrogen – opening up the prospect of zero-emissions steel production by using renewable hydrogen.

Hydrogen will become cheaper as current methods, which rely on creating hydrogen fuel from purified water, are superseded by less expensive technologies such as one being developed by Stanford researchers, who have been separating hydrogen and oxygen gas from seawater via electricity.

And millions of tonnes of carbon used in shipping will be saved by using steel close to where it is manufactured

Pendleton sees the current economic model, ‘now the default preference of our policy-makers’, as absurd; in Fife, steel fabrication firm BiFab is in mothballs (right) while energy giant EDF imports the casings for the turbines on its new offshore wind farm from Indonesia.

He points out that Indonesia and some of our European neighbours’ governments habitually intervene to ensure that ‘foundational industries’ have guaranteed supply chains and amply-filled order books.

British Steel owners Greybull, a private investment company which owns many other industries, are unlikely to be seriously affected, but the company’s workforce, its suppliers, Scunthorpe and the wider economy will. It will be a disaster, politically and economically. Andrew Pendleton ends:

“Nothing short of immediate nationalisation is needed; anything less will be a betrayal of a whole town and will send shockwaves through the UK’s industrial heartlands . . .

“It is not too late for the government to step in and take the company over, which would have the immediate effect of keeping people in work and the economy of a town afloat. This is absolutely government’s proper role. But it shouldn’t stop there. After nationalisation should come a three-pronged approach:

  • focus on industrial strategy for British Steel in order to secure its supply chains
  • fill up its order book with a proactive procurement policy.
  • and create a worker owned company who could then benefit from an ownership dividend

“Given the UK’s need to invest and build green infrastructure, such as railways, steel is of national strategic importance”. 

 

Read Andrew Pendleton’s article here.

 

 

 

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Dual fuel ferry builders threatened: shouldn’t governments support saving skills and projects reducing emissions?


The last civilian shipyard on the Clyde is threatened by a dispute between the owner of Ferguson Marine Engineering, Jim McColl, founder of Clyde Blowers Capital who saved the shipyard from closure in 2014, and one of Scotland’s leading businessmen and state-owned Caledonian Maritime Assets (FT: 7.7.19).

Ferguson Marine has been able to diversify and Clyde Blowers’ investment of £25m has transformed the yard. It has been retooled, with a new shed for all-weather work and its weekly output capacity increased from 13 tonnes to 150 tonnes a week. It is building a self-propelled hover barge and has won several other contracts, including one to develop a hydrogen-powered ferry fuelled by hydrogen from the Orkney electrolyser.

An odd relationship: Caledonian Maritime Assets (CMal), owned by the Scottish government, was established in 2007 to own and manage the country’s ferries and harbours and its subsidiary, CalMac Ferries, competes to operate ferry routes using vessels owned by CMal.

The dispute concerns two dual fuel ferries ordered by CMal from Ferguson Marine under a fixed-price design-and-build contract.

CMal declined to comment on changes recorded by Jim McColl who explained that delays and increased costs on substantial late changes by CMal to the ferries’ original specifications, including:

• one case where CMal had changed the number of seats it wanted. This required 11 structural pillars to be moved

• and a demand that the location for bringing aboard LNG fuel be moved from amidships to the aft section. This required cutting through bulkheads and routing the large vacuum-insulated cryogenic pipe through complex parts of the vessels.

Fine rhetoric about addressing climate change is not enough. It must be supported by the release of funding – perhaps redirected from the uneconomic and technically fraught building of new nuclear power stations – or from HS2.

 

Sources (links did not transfer)

 

 

 

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Outsourcing 4: MoD’s new ships should be built in Britain

 

All those with an interest in Italy’s Fincantieri, Spain’s Navantia, Japan Marine United Corporation, and Daewoo Shipbuilding and Marine Engineering of South Korea – and their British shareholders – will rejoice as the Ministry of Defence decided to put the £1bn contract for the building of fleet solid support ships out to international tender in February.

France and Italy build their own solid support ships, ensuring that the work remains within national borders. Rodney Reid (Financial Times) responds to the news by describing Britain’s approach as ‘muddled’. He recommends that vessels required for use by the Royal Navy should be built in Britain, preserving jobs and skills in this country. A month later Mr Reid reported that Fincantieri and Daewoo Shipbuilding and Marine Engineering had withdrawn due to the ‘significant’ advance funding required.

Unions and shipbuilders have urged that the vessels to be built under this contract with flight decks, advanced weapons systems and extensive dry storage, to carry supplies needed by the carrier fleet when on mission, should – as in France and Italy – be classed as complex warships. This would enable them to be built in the UK, exempted from EU laws preventing protectionism.

Reid asks: “With the Appledore shipyard in Devon, which has built ships for the Royal Navy for well over a century, likely to close at the end of March without any new orders, is it too much to expect joined-up thinking at the MoD to keep valued jobs in the UK and save a valuable shipbuilding asset?”

Admiral Lord West of Spithead points out a few of the advantages of building these ships in Britain:

  • the benefits to the exchequer of tax receipts from the firms involved and their workers,
  • the lack of exchange rate problems,
  • maintenance of highly skilled workers
  • versus redundancy and retraining to be shelf-stackers or something similar.

A false economy?

In an earlier FT article, co-authors David Bond, Henry Mance and Peggy Hollinger assert that the MoD wants to cut costs by using the subsidised shipyards of other countries but defence experts say that might be a false economy. Francis Tusa of Defence Analysis said a report commissioned by the unions will show next week that 25% of the spending on the vessels would return to the government in direct taxes.

Admiral West agrees: “The Treasury is deluding itself if it thinks it is cheaper building them abroad. The fleet solid support ships should be built in the UK.”

 

 

 

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Brexit 8: Post-Brexit: moving from globalisation towards resilient self-reliance

A call for building strong productive local and regional communities and new trade systems that fulfil human lives without wasting resources and energy  

Today the Financial Times (paywall) reports that the number of foreign investment projects has dropped by 14% to 1,782 in the financial year ending March 2019, since the 2016 Brexit referendum. This is the lowest level in six years, according to a report published on Wednesday by the UK’s Department for International Trade.

As multinational profits continue to fly out of the country and taxes are evaded, we return to the valuable 2017 report by Victor Anderson and Rupert Read entitledBrexit and Trade Moving from Globalisation to Self-reliance’, published and launched by Green MEP Molly Scott Cato. 

Although it regrets leaving the EU and wishes we wouldn’t, the report is written as an alternative approach assuming we are outside the EU. Its Executive Summary states:

This report puts on to the political agenda an option for Brexit which goes with the grain of widespread worries about globalisation, and argues for greater local, regional, and national self-sufficiency, reducing international trade and boosting import substitution”.

Colin Hines comments: It details the need for an environmentally sustainable future involving constraints to trade and the rebuilding of local economies. On page 14, the report calls for ‘Progressive Protectionism’:

“Reducing dependence on international trade implies reducing both imports and exports. It is very different from the traditional protectionism of seeking to limit imports whilst expanding exports. It should therefore meet with less hostility from other countries, as it has a very different aim from simply improving the UK’s balance of payments. It could be described as ‘progressive protectionism’, or ‘green protectionism’“.

The report’s recommendations are summarised under three headings: the environment, globalisation and localisation (below):

  • Change trade agreements to allow governments to promote greater national, regional, and local resilience.
  • Shift taxes, subsidies, and public expenditure on infrastructure, away from unfairly favouring large and global companies, and redirect them to help build up local economies.
  • Link banking directly to local and regional economies rather than to the international financial system.
  • Boost the number of places for skills training in sectors where UK production can substitute for imports.
  • bring in short-term government subsidies to invest in and develop economic sectors where UK production can be expected to substitute for imports as part of the new strategy. These would not necessarily be ‘infant industries’: they might be old sectors being revived and renewed.
  • Introduce or increase tariffs on imports of goods and services, especially those where domestic production is a viable and environmentally sustainable option.
  • Democratise English sub-regional devolution arrangements and reform local government finance, so as to provide for effective decentralisation of power.

The globalisation of recent decades has been very one-sided. There have been enormous benefits for large business corporations, financial institutions, and the super-rich. As smaller companies have found it difficult to compete, the multinationals have used a worldwide network of tax havens to escape from taxation and regulation.

‘Brexit and Trade’ sets put a new option for Britain. Instead of removing protective regulations against environmental threats it advocates establishing high Green standards and practical localisation measures. It would address the very real social, economic and environmental problems of globalisation, serving present and future generations well.

 

 

 

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Can Britain afford to offshore ship building?

Cammell Laird, working to full capacity in 2012

Though Cammell Laird’s Birkenhead shipyard won two contracts this month, worth a total of £619 million, to provide spares, repairs and do maintenance work for the Royal Fleet Auxiliary over10 years, news of plans to axe about 40% of the workforce (290 jobs) by the end of March 2019, was given to union representatives and workers today (11th October).

The Unite union is demanding that Cammell Laird sets out the business case for cuts which will see the loss of vital skills and ‘backdoor casualisation’ of the workforce. It fears that the proposed job losses will undermine the shipyard’s ability to fulfil new contracts.

Unite’s assistant general secretary for shipbuilding, Steve Turner, said: “The loss of jobs at Cammell Laird would see skills gone for a generation and be a further blow to the UK’s shipbuilding industry . . . it is clear that the government must and can do more to support UK shipbuilding jobs. This must include the government stepping in and supporting the retention of skills and jobs while shipyards like Cammell Laird wait for new contracts to come on stream”.

Instead of ‘offshoring’, the government should be handing contracts to build the Royal Navy’s new fleet solid support vessels and a £1.25bn contract for Type 31e frigates (maritime security-focused platforms) to UK shipyards, using British made steel as part of an industrial strategy that supports jobs and communities across our four nations.

https://www.savetheroyalnavy.org/fleet-solid-support-ships-an-important-part-of-the-naval-logistic-chain/

Yesterday it was reported that MPs had urged civil servants (defence officials) to pick a UK company for the £1billion contract for three Fleet Solid Support vessels for the Royal Fleet Auxiliary. Commons Defence Committee chairman and senior Tory MP Julian Lewis feared that foreign firms subsidised by their governments could undercut British rivals.

Penny-wise, pound foolish?

The MoD’s director general for finance told MPs the department’s biggest concern was “what will deliver the greatest value for money”- meaning the lowest bid – a narrow perspective. But as Labour MP John Spellar pointed out, the Treasury would benefit from tax revenue ploughed into public coffers if the work was carried out in the UK  –  “a significant return” – which would be multiplied by work given to British steel and component manufacturers.

Steve Turner said that a failure to have these ships made in Britain would be ‘a gross betrayal of UK ship workers and regional economies, putting at risk manufacturing skills vital to our country’.

 

 

 

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Only one group in Britain is acting on the danger to the country’s food security

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Nationally and internationally eminent researchers and commentators are focusing on the damage done to damage the environment and human health by agriculture (example).

This, in a country whose manufacturing industry was the first to pollute its air, water and soil and whose armaments industry continues the process (see a recent study of pollution caused by war activity, during development and testing of hardware, weapon systems and procedures, war operations and subsequent reconstruction).

A country which could and should provide its own staple food is becoming increasingly dependent on imports because their family farmers have been grossly underpaid for many years by middlemen and large retailers. According to the NFU (2015), the number of dairy farmers in England and Wales has halved since 2002 – cause and effect.

As family farmers leave in droves each year we must assume that the country’s environment and human health will improve by leaps and bounds. Not so, their land will be bought by those largescale investors who have reaped the benefit of EU subsidies for so many years.

William Taylor and other leaders of Northern Ireland’s farming organisations have been actively lobbying politicians from all parties and none. Their August press release ended:

Farming families traditionally were charity givers, now 25%+ are living below the poverty line, therefore, denoting complete current Government policy failure. FFA therefore call on the Westminster Government to implement legislation on farm gate prices which would return farmers a minimum of the cost of production plus a margin inflation linked forthwith across the staples throughout the UK to force fairness into the food chain for farmers immediately. 

There is now proof from University College Dublin that in the farming industry every new job on a farm would create 4 down the line and whilst farming is not viewed by Westminster as the biggest UK industry in money terms (partly the fault of the food corporates) it is the largest UK industry by tonnage handled, 60%+ of all commercial road vehicles haul food or food related products to give but one example. 

If legislation on farm gate prices is not forthcoming from Westminster, such as that being sought at Stormont when it re-sits to sort the UK’s farm gate price crisis, then it will confirm what we all suspect, the large food retailers are out of control with their influence in ‘Democratic’ Westminster, the limited powers of the supermarket Ombudsman’s Office a case in point!

 

 

 

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New Fleet Solid Support ships: cash-strapped MoD should look at the total cost-benefit of building in Britain

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Jeremy Corbyn is in Glasgow today, where – reversing New Labour policy – he will call for Navy shipbuilding contracts to stay in the UK.

The contract could lead to over 6,500 jobs in the UK, 1,800 of those in shipyards: “Our proposal would both sustain existing shipbuilding and supply chain jobs and create new ones – right here in Scotland and also across the UK.”

The MOD, which is alleged to have ‘lost controls of costs’, hopes for a cheaper option. Its spokesman added: “We are launching a competition for three new Fleet Solid Support ships this year and strongly encourage British yards to take part”.

“Until the new Fleet Solid Support Ships (FSS) arrive, these hardy veterans must stagger on into the mid-2020s” 

STRN points out that the need for these important ships was first stated in 2015 – and it is feared that the first ship will probably not be ready for sea until around 2025.

The three currently supporting ships supply ammunition, food and spares are “antiques built in the late 1970s and saw action in the Falklands War”. Corbyn warns:

“By refusing to help our industry thrive, the Conservatives are continuing their historic trend of hollowing out and closing down British industry. Over the course of the 1980s under the Tories, 75,000 jobs were lost in UK shipyards, leaving just 32,000 remaining.

“Our shipyards used to produce half of all new ships worldwide. Our current market share is now less than half a per cent. The Tories seem hell-bent on accelerating and deepening this industrial decline.”

SNP MSP for Glasgow Anniesland, Bill Kidd, is sceptical, saying: “Workers on the Clyde and people across Scotland haven’t forgotten Labour’s betrayal of the industry in 2014.

 

 

 

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