At the
beginning of 2014, lots of commentators are lining up to deliver good news
about the prospects for the economy. Factors such as the purchasing managers’
index, last quarter growth figures and record car sales seem to herald better
prospects than we have seen for at least seven years.
This brings
to mind Pharaoh’s dream in the book of Genesis. After seeing seven fat and
healthy cows emerge from the water to consume seven fresh heads of grain, they
were followed by seven gaunt and unhealthy cows that ate the healthy cows.
Joseph’s interpretation was that seven years of plenty would inevitably be
followed by seven lean years.
When you
look back on UK and world economic cycles since World War 2, it is remarkable
how similar the pattern has been. From 1945, there were seven years of post-war
austerity, followed by seven years of healthy growth in the 1950s, culminating
in those famous words of Harold Macmillan: ‘You’ve never had it so good’. Then
came the optimism of the 1960s, with another Harold (Wilson) who was master of
the sound bite alluding to: ’the white heat of technology’. This was followed
by the misery of the early 1970s, and so on.
So if
history (supported by biblical reference) is repeating itself, we are at the
beginning of another golden age, which will last for at least seven years.
During this time, we can all look forward to increasing industrial output,
lower unemployment, higher living standards and better prospects for the
emerging generation. This trend is already being reflected by the sharp
increase in UK exports and positive figures, in most cases, from the high
street. We are also worryingly close to that familiar British phenomenon, the
house price bubble, but that’s another story!
My only fear
is that the opportunity will be squandered, as it has been so many times
before. Economic growth that is driven by consumer spending on imported goods
and services is not sustainable. We must continue with a re-balancing of the
economy back towards manufacturing and exporting.
When I was
growing up in the 1960s and 70s, my home city of Birmingham was one of the
powerhouses of world industry. Anyone taking the train into New Street station
would pass countless numbers of factories, both large and small, producing
everything from nuts and bolts to articulated lorries, most of them working
around the clock and making goods that were sold all over the planet.
The days of
high volume production on this scale are unlikely to return, as these kinds of
operations are generally going to low cost, developing countries such as China,
Brazil and Mexico. However, UK Trade & Investment is doing a terrific job
by nurturing high-end; high-technology manufacturing that is reaping dividends.
In addition,
schemes such as Sir Richard Branson’s Virgin StartUp are providing the
necessary liquidity for young entrepreneurs to realise their visions and invest
in the machinery, premises and staff that new enterprises so desperately need.
At Riley Surface World, we have seen a recent upsurge in equipment that is
being acquired with the help of these programmes.
The surface
finishing industry, in turn, must change and adapt to fulfil the demands of the
new industries that are emerging. In the UK, we have unrivalled expertise in
this sector and access to a great deal of plant and machinery that is becoming
available from larger companies due to global restructuring. These
opportunities must be grasped with both hands if we are to enjoy the spoils of
the next seven years before it all goes downhill again. Happy New Year!
