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PostDeath of UK Manufacturing (John Heelan, -UK, 01/24/13 9:02 am)
Cameron Sawyer and Istvan Simon gave their interesting perspectives (23 January) on my note about the decline of UK manufacturing (exacerbated by union strife) and the inexorable rise of the service industry. Both perspectives have elements of truth in them. Cameron blames management and lack of innovation: in my experience manufacturing management was playing a catch-up game with the competition, especially with German competitors that post-WWII were able to use Marshall Plan money to re-equip plants with the latest machinery while UK manufacturing continued to struggle with outmoded machine tools. Further, German competitors had a more motivated and productive workforce, leavened with a supply of lower-cost immigrant "gastarbeiters." Management was also at fault at times by refusing to acknowledge reality. (I know from personal experience one major aircraft engine manufacturer that refused to recognise the rapidly increasing cost of design and production, and relied on its undoubted product quality to see it through the bad times. It did not and they went bust.)
Cameron suggested there was a view that capitalism was outmoded and government intervention was more important. Difficult to support, as there were successive Conservative governments from 1951-1964 and 1970-1974. However the view that "government intervention was more important" was at its height during Labour governments (1964-1970 and 1974-1979). Another sociological element (in my humble opinion) was a general attitude that still said, "Well, we won the war didn't we!" that ignored reality. The major union damage was done between 1964 and 1979, which includes the period of the weak Heath Conservative government that caved in to union power.
Istvan compares treatment of unions in the UK and the US and blames the UK class system. Once again, there is some truth in that suggestion, but I suggest it stems more from the traditional stand-off between labour and management that still pertained until perhaps the late '80s. In praising the cooperation between labour and management in the US, Istvan forgets the 35 or so major US strikes in the 1960s and '70s. (Such events as the United Auto Workers nationwide strike against General Motors. That strike lasted 67 days, triggering layoffs at parts suppliers and steel companies. Nor let us forget the 1981 Air Traffic Controllers strike that Reagan ended by sacking 11,345 of them.) The best management approach I observed was in the multinational that employed me. The UK manufacturing workforce demanded a union as there were entitled to do under the law. The management agreed, but pointed out that pay rates would descend considerably to the union's basic rates for that industry. The request for a union disappeared..
Regrettably neither Cameron nor Istvan commented on the second part of my hypothesis, in which I suggested that governments in thrall to their paymasters in big business are as much a danger to the long-term economy of of their countries as those governments dominated by union power.
JE comments: Thoughts on John Heelan's second hypothesis?