It’s the 40th anniversary of the end of the miners strike and I went back to Redhills to watch a documentary about the. strike. People who grew up in former mining owns bemoaned the decline of manufacturing and similar industries, and the disappearance of the tight knit communities that grew up around them
Thatcher’s period as PM was blamed for all of this.
At the same time politicians from Trump in the US to Andy Burnham in the UK are making manufacturing a key part of their political appeal. It has become an easy answer to all of out problems, and many other advanced economies – increase our manufacturing output.
Oddly the number of people who want the UK or the US to have a bigger manufacturing sector is much larger that the number of people who want to work in factories.
So how realistic is this plan? And what does this have to do with Gin?
How much manufacturing does the UK still do?
The UK still has a sizeable manufacturing sector. Manufacturing is around 8.5–8.9% of UK output, employing about 2.6–2.7 million people. UK manufacturers sold about £452bn of products in 2024, with food manufacturing the largest division.
Internationally, the UK is no longer an industrial giant, but it is not a post-industrial joke either. It is roughly around the 10th largest manufacturing nation, with significant strengths in: Food and drink, chemicals and pharmaceuticals, aerospace, automotive, machinery, metal products, electronics/electrical equipment, and transport equipment.
The UK’s awkward position is trade: in 2025, it ran a large goods deficit, partly offset by a very large services surplus. The Commons Library puts UK exports of goods and services at £931bn and imports at £970bn in 2025, with a £242bn goods deficit offset by a £203bn services surplus. That means that industries like financial services, education and tourism offset our shortfall in imported manufactured goods. In very basic terms foreign students coming to UK universities, or foreign investors putting money into the City of London offset our purchases of German cars and Spanish wine.
This would indicate that we can boost our economy by selling the world more services; finance, eduction, etc. or by importing less manufactured goods. We could also encourage more Brits to holiday in the UK rather than go abroad.
How much has manufacturing declined?
The big decline is in share of GDP and employment, not necessarily in absolute output.
Manufacturing was about 30% of GDP in 1970 and is now under 9%. Manufacturing employment fell from around 21% of the workforce in 1982 to around 8% by 2018, with roughly three million fewer manufacturing jobs over that period.
Obviously a big factor was Margaret Thatcher, who closed down huge amounts of nationalised manufacturing and production, but who also raised interest rates and exchange rates to reduce inflation, making lots of non-nationalised manufacturing uncompetitive.
But that isn’t the whole story, and there deeper causes:
- productivity growth: fewer workers needed to produce the same or more;
- as consumers get richer they spend more on services and less on goods
- global competition;
- offshoring and global supply chains;
- high exchange rates and interest rates in key periods;
- high energy costs;
- policy instability;
- Brexit, especially for food, drink and smaller exporters.
Boris’s bodged Brexit deal hammered lots of small exporters, including me.
A government review noted that around half the fall in manufacturing’s GDP share could be explained by manufactured goods becoming cheaper relative to services and by lower income elasticity of demand for goods. In plain English: once people have enough stuff, they spend more of each extra pound on services. Your wages might have gone up but you still only need one washing machine.
Other countries saw versions of the same trend. The UK deindustrialised earlier and harder than Germany, but it was not unique. The US, France and much of Europe also saw manufacturing employment shrink. Germany kept a larger industrial base partly through Mittelstand firms, vocational training, regional banks, export discipline and supply-chain depth. Boring institutional stuff, in other words — the very stuff British politics likes to replace with slogans and bunting. Exactly the kind of industrial policy that British governments rejected in favour of leaving things to the free market.
Can manufacturing be brought back?
Some of it, yes. But with a crucial difference. We can’t bring back 1970s steelworks and car plants with armies of workers. Modern manufacturing is capital-intensive, automated and highly specialised. Even successful reshoring may not produce many jobs.
The most likely growth areas are:
- defence and aerospace;
- pharmaceuticals and life sciences;
- specialist chemicals;
- precision engineering;
- batteries and grid equipment;
- offshore wind supply chains;
- robotics and advanced machinery;
- food and drink where provenance matters;
- recycling, materials recovery and circular-economy manufacturing.
The hard truth: if Britain wants more manufacturing, it probably needs some combination of cheaper industrial energy, patient capital, planning reform, skills policy, public procurement, targeted subsidies, and stable industrial strategy. Tariffs alone are the pub-bore version of industrial policy: loud, simple, and usually expensive.
Tariff and non-tariff barriers could protect some sectors, but they also raise costs for consumers and for manufacturers using imported components. For the UK, the bigger problem is often not tariffs but regulatory friction, especially with the EU. Food and drink exports to the EU have been hit particularly hard since Brexit, with reported falls in volumes and extra bureaucracy. Regulatory friction means complex rules and paperwork that make it harder and more expensive to export, and in some cases like fresh fish, make exporting uneconomic.
Inside the EU we used the same paperwork to sell to Berlin and Birmingham, in fact due to EU trade deals it was mostly the same paperwork to sell to Tokyo. Not any more.
What are other countries doing?
The US has gone hard on industrial policy. Biden used the CHIPS Act and Inflation Reduction Act to subsidise semiconductors, batteries, EVs and clean tech. Trump has added a more aggressive tariff-and-pressure model: use tariffs or threats of tariffs to force companies to invest in the US. TSMC, for example, announced a huge expansion of US chip investment, with Trump explicitly linking this to tariff avoidance.
The EU is also moving in a more protectionist/industrial-policy direction, with “Made in Europe” ideas, local-content rules, clean-tech support, steel protection and strategic autonomy language.
China has been doing this for years: cheap finance, state direction, export discipline, infrastructure, scale, and ruthless support for favoured sectors. That is how it came to dominate areas such as solar panels, batteries and EV supply chains.
Growth and Productivity
The government’s growth strategy is built around raising productivity. Productivity is the single biggest determinant of long-term wages and living standards. If each worker produces 2% more output each year, the economy gets richer without people working longer hours. The UK has become a low productivity, low wage, low growth economy, and Brexit has made this worse.
The problem is that manufacturing isn’t a single thing. When Governments and the press talk about manufacturing this is what they have in mind::
- Semiconductor fabrication
- Aerospace
- Pharmaceuticals
- Robotics
- Battery gigafactories
- Precision engineering
- Medical devices
These industries produce enormous value per employee.
A modern Rolls-Royce aero engine factory might employ only a few thousand people, but each worker is producing hundreds of thousands of pounds of output annually. The same is true of pharmaceutical plants.
Politicians love these industries because they tick every box:
- high productivity
- exports
- innovation
- R&D
- graduate jobs
- clusters around universities
Craft manufacturing
But there are other manufacturing sectors like mine
Gin.
Beer.
Cheese.
Chocolate.
Luxury furniture.
Musical instruments.
These are almost the opposite.
You don’t want them to become fully automated, or highly productive. Nobody buys Durham Gin because it’s the cheapest possible bottle produced by robots. They buy it because somebody selected the botanicals, developed the recipe and made something distinctive.
In fact, automation can actually destroy the value proposition. You can’t automate:
- tasting
- recipe development
- brand building
- tourism
- provenance
- craftsmanship
Those are exactly the things customers pay for.
Imagine a whisky advert saying
“Every bottle was produced entirely by robots.”
That isn’t a selling point.
This doesn’t mean that craft industries are unproductive. They’re productive in a different way. A brewery might employ only ten people, but those ten people might export around the world. They support tourism, they buy local ingredients, they generate profits, they’re innovative and they’re part of a wider ecosystem.
This is the problem – bringing back manufacturing involves efficiency and productivity, but that isn’t always what customers want. But if we want investment in manufacturing to generate jobs investing in craft and niche creates more employment, but with less productivity and efficiency.
This is why growing manufacturing is more complex than
This is where Britain has an advantage
Britain has become extremely good at selling quality rather than quantity. Britains biggest exports and guns, drugs, whisky and fast cars. That is to say:
- Scotch whisky
- Smoked salmon
- Jaguar Land Rover
- Aston Martin
- Rolls-Royce engines
- Defence and aerospace
- ARM chip designs
- Pharmaceuticals
- Burberry
- McLaren
Very little of this competes on price.
Almost all competes on quality. This isn’t always popular. The British fishing industry moved away from high volume low margin fish like cod and invested in high margin, high quality spieces like Dover Sole and Dungeness crab.
British politicians often talk as though manufacturing is simply about making things. Increasingly it isn’t.
A Rolls-Royce engine contains software, sensors, digital twins, predictive maintenance contracts and decades of engineering IP. The physical object is only part of the value. We can grow manufacturing exports by selling more Rolls-Royce engines. But we can achieve the same by selling the same number of engines but selling maintenance contracts ,R&D consultancy, training and development, or financial services to foreign customers alongside the engines. This all counts, and in many cases is easier to achieve them more engines sales, which depend on the state of the international aviation market. But this doesn’t create more jobs for men in overalls.
Likewise, Durham Gin isn’t just alcohol in a bottle. It’s branding, design, storytelling, tourism, hospitality, e-commerce and intellectual property wrapped around a physical product.
That suggests the old distinction between manufacturing and services is becoming less useful. Much of Britain’s competitive advantage lies in combining the two. A premium manufacturer increasingly succeeds because it offers design, software, logistics, marketing and after-sales support alongside the product itself. Our balance of trade improves if we sell more products but it also improves if we sell maintenance contracts, training or finance to a foreign purchaser.
The UK’s manufacturing problem is real, but the political nostalgia is mostly fake. We cannot bring back the world of mass industrial labour. We might be able to build a stronger advanced manufacturing economy — but only if we stop treating manufacturing as a costume drama and start treating it as infrastructure, skills, energy, finance and trade policy. When politicians talk about bringing back manufacturing they imagine lots of men in factories or perhaps women like Rosie the Riveter, as it the solution to our economic problems is Lowrie painting. This is because they see increased manufacturing output not just as an economic solution, but a social one too, bringing back the tight knit cohesive communities that existed around mass industry.
But that isn’t going to happen. The expansion of manufacturing is going to increase demand for engineering graduates, marketing specialists, accountants, R&D specialists, design graduates, more than it will increase demand for manual labour.
Rather than asking “How do we bring manufacturing back?”, ask “What kind of manufacturing should Britain specialise in?” That shifts the debate from nostalgia about coal mines and assembly lines to the much harder question of where the UK can genuinely build a comparative advantage in the twenty-first century.
Guns, drugs, whisky and fast cars.