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How Covid-19 Could Herald a New Dawn for Welsh Manufacturing

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The coronavirus pandemic has changed the way millions of us live and work. It has made many of us do things we would not have thought possible three or four months ago. Crucially, it has also made us question some of our long-held assumptions, and think again about the nature of our economy and society.

Nowhere is this more true than in manufacturing. Previously the commonly held view was that manufacturing had a lesser role to play than services, and was in long-term decline; that for the sake of efficiency most firms would offshore much of their activity; and that manufacturing required long and convoluted supply chains as companies sought the best places to make the myriad components that make up modern manufactured goods.

Britain had long since ceased being the workshop of the world; the ubiquitous words Made in China showed who now claimed that title. Never mind that Britain is still the 9th largest manufacturing nation in the world, and that the average salary in the sector is 13% higher than in the rest of the economy.

Covid-19 has exposed the weakness of our assumptions. As governments closed borders and transport ground to a halt, our reliance on long supply chains suddenly looked less efficient. Equipment essential for helping our overstretched health service tackle the virus was unavailable, partly because of the sudden rise in demand, and partly because there were no local suppliers.

In this emergency, many manufacturers stepped up to the plate with impressive speed and agility. Companies that had never before made medical equipment pulled together their design teams, worked out designs, had them approved, made the tools they needed and reorganised their production lines, all within a matter of days.

Companies in all sectors used new technologies like 3D printing to face masks and other vital equipment. Nothing like it had been seen in Britain since carmakers and other manufacturers turned their factories over to making tanks and fighter aircraft during the Second World War.

It’s not the only way our experience in this pandemic resembles a wartime mobilisation. The responsibilities government has taken on – guaranteeing wages, backing loans, deferring taxes and taking on debt – are unlike anything we have seen for decades.

As our thoughts turn towards how and when we come out of the lockdown and return to something like normality, questions arise about what lessons we can learn and how we should think about reconstructing our economy.

We don’t know what shape our economy is going to be in over the next few months. Although the Government has extended the Job Retention Scheme until the end of June, it’s still possible we could see a big rise in redundancies when it does end. It’s difficult to imagine normal economic life returning until an effective vaccine has been developed and produced in quantity.

We don’t yet know how many businesses will be able to survive the loss of trade, how many are unable to take advantage of government-backed loans or other support, or how many are unwilling to take on the extra debt. We don’t know whether people will go on a post-virus spending spree when the lockdown ends, or if they will be cautious with their money.

What we do know is that there is an opportunity in the agility that some of our best manufacturing businesses have shown. We should be thinking again about our manufacturing supply chains and our security of supply. Let’s remember that, as we come out of the economic shock of Covid-19, we will be heading once again into the uncharted territory of Brexit, with the Government still insisting the transition period to new trading arrangements will end on December 31. We have no idea what trading relationships we will have with the EU or the rest of the world.

In these circumstances, it makes sense to reimagine our manufacturing sector. Suddenly globalisation looks less attractive than localisation. In a post-virus, post-Brexit world, reshoring makes more sense than offshoring. We should do what we can to strengthen our manufacturing sector.

It’s above all our younger, more agile firms that have shown their mettle in this crisis. The problem is, many of our younger firms are too small to take advantage of the opportunities that are out there. There is a need for collaboration, for working together so our businesses can grow into new markets.

The time may be right for a new effort to promote manufacturing, and help Cardiff Capital Region’s manufacturers both compete on the world stage and provide the country with greater security of supply at home. Companies could find new ways of working together to make the most of opportunities, and government support the sector with new incentives and well-planned investments.

Above all, the country could awaken to a renewed recognition of the critical importance of manufacturing to our life as a nation. In this possible new dawn for manufacturing, it’s vital that Cardiff Capital Region does not miss out.