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The Decline of Scottish Manufacturing
A debate on motion
S2M-3497, in the name of Murdo Fraser, on The Decline of Scottish
Manufacturing.
The
Deputy Presiding Officer (Trish Godman):
Our next item of business is a debate on motion S2M-3497, in the name of
Murdo Fraser, on the decline of Scottish manufacturing.
Murdo Fraser (Mid Scotland and Fife) (Con):
We know that the European economy as a whole has not performed particularly
well, so perhaps Europe should not be our model. It is disappointing that
the Executive rejected many of the Subordinate Legislation Committee's
recommendations on the regulatory burden.
We need to examine the size of the public sector in Scotland, which stifles
private sector activity. We are familiar with the comments of the chairman
of Scottish Enterprise on the matter and there is a growing consensus that
the way to grow the private sector is to start reducing the burden of the
public sector.
Under the Executive, the decimation of Scottish manufacturing continues
apace. Unlike the happy years of Conservative Government, when Scottish
manufacturing went from strength to strength, all we have seen during the
past six years is a sad story of decline. It is time for the Executive to
stand up for Scottish manufacturing and take the necessary steps to turn the
situation round.
I move,
That the Parliament notes with concern that the value of the manufacturing
sector fell every year between 1997 and 2002, having previously risen
year-on-year between 1992 and 1997, and that nearly 100,000 manufacturing
jobs have been lost since 1997; further notes with concern the recent
findings of the Scottish Council for Development and Industry that exports
have fallen below £15 billion in value for the first time in a decade;
believes that Scotland can benefit from a solid manufacturing base as part
of a diverse and modern economy, and therefore calls on the Scottish
Executive to take the action required to increase the competitiveness of the
sector by taking measures such as reducing red tape and the size of the
public sector, privatising Scottish Water, encouraging greater participation
in vocational training at further education colleges and bringing forward
the promised business rates cut to April 2006.
The Deputy Minister for Enterprise and Lifelong Learning (Allan Wilson):
We are always pleased to have an opportunity to talk about manufacturing in
Scotland, no matter how incongruous the source of the debate. Unlike the
Conservatives, we regard manufacturing as important. We mention it in "A
Partnership for a Better Scotland".
Murdo Fraser talked about the Conservatives' record but, contrary to what he
said, manufacturing output measured as a percentage of gross value added
fell between 1988 and 1997 from about 24 per cent to 22 per cent. Murdo
Fraser did not mention employment but, during the same period, the number of
jobs fell by 155,000. That figure is significant because of the difference
in
unemployment under the Conservative and Labour Administrations; since the
creation of the Scottish Parliament, we have created more than 155,000 new
jobs — that is, more than the number of jobs that were destroyed by the
Conservatives during their tenure.
Murdo Fraser:
We are talking about manufacturing. Even if it is the case that we lost
155,000 jobs during the 18 years of Conservative Government, is the minister
proud of the fact that the Executive has managed to lose 100,000 jobs during
the past six years?
Allan Wilson:
When we talk about manufacturing, it is important to put the matter in
context. I do not disagree that manufacturing's contribution to the economy
has declined since 1998 but, during the same period, Scotland's economy has
grown by nearly 14 per cent in real terms. That rate of growth is not
matched by many of our competitors. Manufacturing productivity remains 25
per cent higher than productivity in the rest of the economy, which reflects
the fact that the sector is at the forefront of adopting innovative business
practices to eliminate waste. There are still significant gains to be
achieved in that area.
Manufacturing accounts for 15 per cent of Scotland's gross domestic product
and employs approximately 250,000 people. Those are impressive statistics,
but many commentators — people such as me and Wendy Alexander — believe that
traditional measures no longer accurately capture the complexity of
manufacturing in advanced economies in the 21st century. Understanding
manufacturing is much more complex than simply talking about production, as
Murdo Fraser does.
In our advanced global economy, successful manufacturing companies engage in
various parts of the manufacturing process, such as research and
development, product design and development, marketing and aftercare. They
specialise in complex systems integration and systems management across a
global supply chain as well as, or in place of, production.
Jim Mather (Highlands and Islands) (SNP):
Will the minister explain why, if everything is so rosy, his figures show
that manufacturing declined from 22 per cent of GDP in 1995 to 16 per cent
in 2002? The trajectory suggests that the figure is now about 12 per cent.
How can that be considered a success story?
Allan Wilson:
I am trying to explain that measuring manufacturing production simply by GDP
does not take account of the whole manufacturing process.
The Deputy Presiding Officer:
You have one minute.
Allan Wilson:
One minute?
Manufacturing sectors have necessarily undergone a period of transition.
That is not in dispute.
They have had to adapt, innovate and transform to meet the challenges of
globalisation and competition from low-wage economies such as those of Asia
and eastern Europe, and they continue to do so. Jim Mather and Murdo Fraser
talk about decline, but in a modern and innovative economy it is misleading
— and it does manufacturing industry a disservice — to refer to job losses
in production and pretend that that tells the whole story. It does not.
I have a whole lot of things that I would like to say about what we are
doing in the Scottish economy to assist manufacturing, but I will keep that
for summing up. Suffice it to say that there is no use pretending that
Scotland's economy can be immune from the global economic trends to which I
have referred. We should concentrate on creating the right conditions for
manufacturing and business. We have done that and it is set out in "The
Framework for Economic Development in Scotland" and "A Smart, Successful
Scotland". Manufacturing must continue to focus on productivity. Our success
will be evidenced by the fact that our economy continues to grow at a rate
in excess of that of the rest of the United Kingdom, and our employment
figures continue to rise. Many of our key competitors dearly wish to be able
to say the same thing.
I move amendment S2M-3497.3, to leave out from the first "with concern" to
end and insert:
"the important role that manufacturing plays in creating a diverse and
growing Scottish economy and supports Scottish manufacturers adopting
innovative and modern approaches to face the challenge of global
competition; supports the move to higher value and quality products, and
further notes the range of measures brought forward by the Scottish
Executive to support manufacturing: investing in transport infrastructure
and the skills of our people, creating the right environment by reducing
business poundage rates and establishing a Scottish Manufacturing Advisory
Service to support and encourage Scottish manufacturing industry to adapt to
the global competitive environment."
The Deputy Presiding Officer:
We move now to the open debate, but I will not be able to call everyone.
There will be a strict four minutes for speeches. That means four minutes
maximum.
Ms Wendy Alexander (Paisley North) (Lab):
Today's motion is fascinating because, for the first time in a decade, the
Tories have had the courage to offer their previous economic record for
debate. For the past decade, the only thing to be heard from a Tory about
the two recessions, the double-digit inflation, the record unemployment, the
15 per cent interest rates and the doubling of the national debt was, "It
wisnae me."
Alex Johnstone:
Will the member give way?
Ms Alexander:
I am sorry — I am pushed for time.
Today, we have two new Tory leaders on show. In the south, the two Davids —
David Cameron and David Davis — both claim "It wisnae me" when they are
asked about the Tories' economic record. However, in Scotland, the Tories'
new top team are rather different. Annabel Goldie, who was deputy leader of
the Scottish Tories throughout the 1990s, made not a whisper of dissent
during that time. Murdo Fraser was then the full-time right-hand man to
Michael Forsyth and was previously chairman of the young Conservatives. He
was a Thatcherite true believer throughout. Neither of the Scottish Tory
twosome can credibly claim, "It wisnae me."
For the record, one statistic that Murdo Fraser omitted to mention is that
manufacturing's share of the Scottish economy fell more during the years of
Tory rule than it has under the stewardship of the Scottish Executive and
Scottish Parliament. Instead he offered one statistical gem from his hero
Michael Forsyth's halcyon reign. What accounts for it? Was it Tory policy?
Was there an upturn in manufacturing all over Britain? No — it was limited
to Scotland. Of course, that upturn was due to Locate in Scotland
successfully attracting major electronics companies. Although the Tories
hastened the losses of Ravenscraig, Linwood, Corpach, Caterpillar, Bathgate
and so many others about which we have heard from members of other parties,
Locate in Scotland did a job for this country. So why is there no mention in
the motion of Locate in Scotland or its successors? That is no accident. The
reason is that the only budget in the entire £25 billion that the Executive
spends that the Tories want to halve is that of Scottish Enterprise and
Locate in Scotland's successors.
As the 1980s and 1990s wore on, Locate in Scotland privately begged the then
Scottish Office under Michael Forsyth for a change in strategy. Ask George
Matthewson, who went on to build the Royal Bank of Scotland into the giant
that it is today. However, Michael Forsyth was increasingly determined to
buy jobs at any price. We saw less and less of the strategic investment that
allowed Locate in Scotland to bring in Compaq but we saw more and more
companies like Chunghwa Picture Tubes. In the Tories' dying days, £30
million was cynically offered to a questionable company peddling outdated
technology — the classic screwdriver plant — that was always likely to go as
quickly as it came. However, Michael Forsyth's Scottish Office was intent on
financing any scheme in the futile hope that it could hold back the tidal
wave of demand for devolution. Against advice, the Tories gambled with
taxpayers' money and lost.
For 10 years, the Tories have had the humility to hang their heads in shame.
They gave up trying to sell a strategy of low skill, low tech and low wages
to the Scots. Let us hope that the rise of Murdo Fraser, Michael Forsyth's
mate, does not herald a return to the same sorry short-termism that so
scarred Scotland's economy in the past. The new—
The Deputy Presiding Officer:
Ms Alexander, I said that you had a strict four minutes. We must move on.
After Kenny MacAskill has spoken, there may be a brief moment for Christine
May.
Allan Wilson:
I am indebted to my colleague Wendy Alexander for reminding us of the
Tories' record in Scottish manufacturing and, indeed, of Murdo Fraser's
record. It is sometimes difficult to keep up as the Tories try to position
themselves as the friends of manufacturing and Murdo Fraser tries to
reinvent himself as the junior half of the dream-on ticket, as we might call
it.
The motion is wrong, as is the amendment that does not seek to amend the
statistics in the motion. Manufacturing GVA has not been in continuous
decline since 1998 as was suggested.
Between 1998 and 2000, GVA rose by almost 5 per cent. It is only post-2000,
following the slump in electronics to which Kenny MacAskill and others
referred, that manufacturing's contribution to the economy declined.
It is important to acknowledge global change and not to let it cloud our
view of the vibrant manufacturing sector that exists in Scotland today.
I agree with Fergus Ewing that the debate has focused unfortunately on the
past and has not looked to the future or the present. Against that backdrop,
I tell members that we have seen strong growth in other areas of industry
between 1998 and 2004. For example, refined petroleum products and nuclear
fuel grew by almost 20 per cent, chemicals and man-made fibres grew by 8.5
per cent, and the food and drink and tobacco industries grew by 5 per cent.
That shows that restructuring can make a positive and important impact on
key manufacturing sub-sectors in Scotland.
John Swinburne (Central Scotland) (SSCUP):
I remind Parliament that before Wendy Alexander was born, manufacturing in
Scotland started to go into decline — it has not just happened in the past
10 or 20 years. I used to work in engineering; despite the occasional buck
in the industry, it has been in a state of terminal decline since the 1960s.
The Deputy Presiding Officer:
Thanks very much. That was a self-inflicted injury, minister, which comes
out of your speaking time.
Allan Wilson:
It is self-evident that I do not agree with John Swinburne. I tried to make
my point by exemplifying sectors of the manufacturing economy that have
grown because they have restructured, developed and adapted to the global
economy to show positive results.
The same applies to exports. The contribution to the economy by the general
decline in manufacturing exports that Murdo Fraser referred to, like the
result of global restructuring in electronics, masks a significant variation
in the industry. Chemicals, coke, refined petroleum products and nuclear
fuel grew by 10 per cent between 1998 and 2004, as did exports of transport
equipment. Over the same period, exports of food and tobacco increased by 23
per cent. Therefore, to talk about a general decline in exports masks the
fact that certain sectors of our manufacturing economy are doing well, thank
you very much, because of the successful business environment that we have
created and our investment in skills and infrastructure.
I want to concentrate on those areas in my remaining couple of minutes. We
give support to the manufacturing sector and I suspect that that is what
people are more interested in out there in the real world. We give that
support through a range of measures: through the biggest investment in
infrastructure in decades; by creating the right business environment, as I
mentioned; and by freezing non-domestic rates in real terms and aligning
them with the UK to give us a domestic advantage.
We are also making a massive investment in skills and learning. We are
offering direct investment aids to help transform business, such as regional
selective assistance, the SMART, or small firms merit award for research and
technology, and SPUR, or support for products under research, programmes and
the Scottish co-investment fund. We engage directly with Scottish business
to help to minimise the regulatory burden, not just on our legislation, but
more important, at European Union and UK level. We will support the first
national conference on manufacturing later this month. We are committed to
introducing a Scottish manufacturing advisory service to assist
manufacturers, as we did south of the border where the service gave £100,000
of add-on value to all contributors.
That is how we intend to support the manufacturing sector and that is what
the manufacturers want to hear from us in Government. We intend to deliver
that agenda.
The Presiding Officer (Mr George Reid):
There are seven questions to be put as a result of today's business. For
this morning's debate on the decline of the Scottish manufacturing sector,
if the amendment in the name of Allan Wilson is agreed to, the amendment in
the name of Jim Mather will fall.
The Presiding Officer:
The fourth question is, that amendment S2M-3497.3, in the name of Allan
Wilson, which seeks to amend motion S2M-3497, in the name of Murdo Fraser,
on the decline of Scottish manufacturing, be agreed to. Are we agreed?
Members:
No.
The Presiding Officer:
There will be a division.
The Presiding Officer:
The result of the division is: For 67, Against 21, Abstentions 29.
Amendment agreed to.
The Presiding Officer:
Therefore, amendment S2M-3497.1, in the name of Jim Mather, falls.
Resolved,
That the Parliament notes the important role that manufacturing plays in
creating a diverse and growing Scottish economy and supports Scottish
manufacturers adopting innovative and modern approaches to face the
challenge of global competition; supports the move to higher value and
quality products, and further notes the range of measures brought forward by
the Scottish Executive to support manufacturing: investing in transport
infrastructure and the skills of our people, creating the right environment
by reducing business poundage rates and establishing a Scottish
Manufacturing Advisory Service to support and encourage Scottish
manufacturing industry
to adapt to the global competitive environment.
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