PER 2015
The British Manufacturing scene has evolved from a low cost, low skilled labour base to a relatively high cost, high paid market compared to the global scene. This has meant the emergence of multinational corporations such as the likes of Land Rover and Jaguar, which recorded a revenue of £19,386 million in 2014 6 . This revenue coupled with a growth of investment and employment, helps to disprove the belief that governmental support is required. The Unique selling point for these goods is not the cheap price but the superior level of quality; subsequently the high price helps to sell the luxury factor with prices of the New Range Rover starting from as much as £74,950, meaning that it is a Veblen good, which are goods demanded due to their high price. Furthermore these goods are award winning, models such as the Jaguar F-Type which was voted the winner of the prestigious Golden Steering Wheel. It is Evident that these British companies are not surviving but at the forefront of their respected industry. There is the inevitable leakage from vast industries such as Jaguar and Land Rover, which helps to cause a cumulative causation; by which this leading economic activity can lead to prosperity in the local industries. Take the Mini Cooper, which has 12,000 working parts and subsequently required a range of local supplier to equip these components for the production. In the direct case of Jaguar, the 55 UK based suppliers helped to provide 55% of components for the Jaguar XE 7 , resulting in growth of supply chains and associated industries.
Britain has an extremely strong banking sector, which with the rising confidence has meant that financial backing for new industries has bee encouraged and supported, which is evident as £29.2 billion of new SME borrowing approved throughout 2014 8 . Quantitative easing was used by the Labour Government to reduce the interest levels, so much so that between March and November 2009 £200 billion 9 worth of bonds were bought. Quantitative Easing works through the central bank purchasing bonds from financial institutions. Therefore the government is already providing tools to stimulate the growth of small and medium-sized enterprises, which employ 60% of manufacturing workers 10 . In addition the interest rates are at a historic low of roughly 0.5% due partially thanks to the $59.61 prices of oil per barrel and the aforementioned Quantitative easing. The low oil prices have an inevitable implication on the cost of goods; which can stagnate and even fall due to their use as a factor of production. OPEC has described oil as “The engine of the world economy” 11 , highlighting the relative significance. Due to low interest rates the cost of borrowing is low meaning
6 http://www.jaguarlandrover.com/media/23108/annual-report-2104.pdf
7 http://newsroom.jaguarlandrover.com/en-in/jlr-corp/news/2015/04/jlr_xe_solihull_opening_130415/ 8 https://www.bba.org.uk/news/statistics/sme-statistics/bank-support-for-smes-4th-quarter- 2014/#.VYrW_176lfM 9 http://www.bbc.co.uk/news/business-15198789 10 http://www.manufacturinginfo.co.uk/best-of-british/10-facts-on-the-state-of-british-manufacturing 11 http://www.opec.org/opec_web/en/900.htm
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