EU membership matters to Britain's advanced manufacturers – and it's about far more than the Single Market

 
James Selka
Inside Jaguar Land Rover Factory Plant
Geography matters even in global supply chains (Source: Getty)

A car consists of elements and components that have been sourced from right across the globe. The metal that forms the panels will have been quarried as an ore in one place, been through a foundry in another before being pressed into shape somewhere else. It will then be fitted with an engine that has been through a similar process, glass which has been formed, electronics that have been sourced the world over, and a software package with hundreds of authors.

This assembly of that car could, and does, take place anywhere. But that is not the same thing at all as arguing that manufacturing has outgrown geography. It has not. It is a feature of globalisation that, in some ways, location matters more than ever. Getting the business environment right is made more important by global competition, not less. There is no slack. We have to take every advantage we can: economic, technological and political.

Advanced manufacturing is one of, if not the, most internationalised sectors that exists. Value chains, which encompass the physical supply of goods and the intangible supply of intellectual property and services, span the world and service markets which are global too. Multinationals with hubs on every continent deal with a panoply of small and medium-sized businesses right around the world.

Advanced manufacturing has led the world into the globalised economy. It is also a catalyst for so much else in the economy that its significance is much greater than the notional 10 per cent ascribed to it. Over half of the UK’s exports are manufactured goods and the sector accounts for more than two thirds of our Research and Development expenditure.

Read more: Nine Brexit myths rebutted: Why the City would suffer if we leave the EU

The UK is a great place to make things. We have so much going for us. We have access to a highly skilled and innovative workforce. That workforce speaks English and has proven among the most adaptable in the world to coping with the changes that globalisation has brought to manufacturing. We are in the right time zone, in the middle of the world. We have an enviable science base and a stable system of government as well as a generally competitive tax environment. UK manufacturing draws strength from its proximity to our innovative creative industries and wide variety of financial service providers. And crucially we are part of the European Union.

Access to the Single Market alone is a very persuasive case for remaining in the EU. Unfettered access to the world’s largest market is an asset to be cherished and enhanced. Indeed, with one of the emerging trends in manufacturing being location closer to market, to risk alienating that market – our home market – would be madness.

But this is about more than market access. It is about being a participant in an economic entity that brings with it opportunities to access research funding, to play a leading role in standards setting, to identify the industries of the future, to define regulations that have to be respected around the world, and to take part in the global economic race at an advantage not a disadvantage. Those who say that we would eventually find a new place in the world economy need to answer for the companies that would not survive the upheaval, the markets lost, even if temporarily, and the investment stopped, forever.

We don’t believe that Brexit would be the end of the world as we know it. We will still have efficient manufacturers and innovative entrepreneurs. But we need to be very aware that, in future investment decisions made by global companies (whether they are based in New York, Tokyo, Munich – or even for that matter London, Birmingham or Manchester), our country, as open to market forces as we surely must be, will be at a disadvantage if we are not in the EU. A disadvantage of our own making that we do not need to incur.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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