0:00:04 > 0:00:08'In a high security compound in north-west England
0:00:08 > 0:00:12'is a machine that mankind has only been able to dream about.
0:00:13 > 0:00:16'And I'm being allowed to see it.
0:00:16 > 0:00:19'The building I'm going to is anonymous.
0:00:19 > 0:00:22'Inside is a project extraordinary,
0:00:22 > 0:00:25'intriguing and extremely hi-tech.
0:00:27 > 0:00:33'Many of us think that Britain had a great industrial past, but today we make nothing.
0:00:34 > 0:00:38'But behind this door is something that disproves all that
0:00:38 > 0:00:41'and it's made in Britain.'
0:00:41 > 0:00:43What...
0:00:47 > 0:00:51'This is called the Mantis, the world's first autonomous aircraft.
0:00:51 > 0:00:53'It isn't a drone.
0:00:53 > 0:00:59'There's no-one on the ground controlling it. It thinks for itself, decides for itself
0:00:59 > 0:01:01'and flies itself.'
0:01:01 > 0:01:08I was expecting something that was a kind of oversized model aeroplane, but...
0:01:08 > 0:01:12It's just miles, miles bigger than I had pictured it.
0:01:12 > 0:01:18'It paves the way for a science fiction future of pilotless airliners
0:01:18 > 0:01:21'and driverless cars.
0:01:21 > 0:01:25'But will technology like this finance Britain's future?
0:01:27 > 0:01:31'For years, we thought the City could keep our economy growing
0:01:31 > 0:01:36'and that borrowing and spending was more important than making things.
0:01:36 > 0:01:39'Then came the Crash.
0:01:39 > 0:01:42'Britain emerged burdened with debt
0:01:42 > 0:01:46'and unsure how to rebuild its economy.
0:01:46 > 0:01:50'Now at this critical moment in Britain's story,
0:01:50 > 0:01:54'it's time to ask what should we be doing to pay our way in the world.'
0:01:54 > 0:02:00People understand the importance of manufacturing and that making things is good for the economy.
0:02:00 > 0:02:03'Although we invented mass production,
0:02:03 > 0:02:07'are we now being beaten at our own game by countries like China?
0:02:08 > 0:02:13'I've travelled to the heart of their economy and I'll challenge assumptions and myths,
0:02:13 > 0:02:17'such as we're losing out to the Chinese manufacturing giant.'
0:02:17 > 0:02:22- Could you have survived if you hadn't moved to China? - Absolutely no, no, no.
0:02:22 > 0:02:28'Nations often define their economic success by the things they make.
0:02:30 > 0:02:34'In Britain, we're better at it than you might think.
0:02:34 > 0:02:39'You might be surprised to learn we're the seventh biggest manufacturer in the world,
0:02:39 > 0:02:45'but to pay for all our imports, we need manufacturing to get bigger still.
0:02:45 > 0:02:47'The stakes are high.'
0:02:47 > 0:02:51- You must be a bit scared. I mean, it's...- Scared?
0:02:52 > 0:02:55I'm an entrepreneur. Why would I be scared?
0:02:55 > 0:03:02'In this series, I'll bust the myth that we make little or nothing and show you how industrious we are.
0:03:02 > 0:03:06'I'll be looking at the three great engines that power our economy,
0:03:06 > 0:03:10'how they're connected and the challenges they face.
0:03:10 > 0:03:14'The knowledge sector - what we invent,
0:03:14 > 0:03:17'services - what we run
0:03:17 > 0:03:21'and first, manufacturing - what we make.'
0:03:21 > 0:03:26At difficult times like these, it's easy to be overcome by economic gloom.
0:03:26 > 0:03:29After all, we've lots of problems to resolve.
0:03:29 > 0:03:33But there are plenty of reasons to be confident
0:03:33 > 0:03:35in our abilities and in our future.
0:03:35 > 0:03:40So what is it we do well? What do we do wrong? And how do we pay our way in the world?
0:04:02 > 0:04:06'Who says we don't make anything any more?
0:04:07 > 0:04:13'Love it or hate it, this Typhoon shows that when we put our minds to it,
0:04:13 > 0:04:17'we can do engineering as well as anyone.
0:04:17 > 0:04:21'At £75 million each, they're expensive,
0:04:21 > 0:04:25'but the Typhoon is arguably the best military jet in the world.
0:04:25 > 0:04:32'It's the product of a four-nation consortium, but BAE Systems in Britain is assembling about 200
0:04:32 > 0:04:35'and makes some of the most complex parts.
0:04:38 > 0:04:42'In the global businesses of aeroplanes and defence,
0:04:42 > 0:04:47'or arms if you prefer, Britain punches above its weight in the world.
0:04:49 > 0:04:54'I've been invited to join a test flight. Like a lot of British industry right now,
0:04:54 > 0:05:00'BAE is working hard to sell more overseas and that means constant refinement of the plane.'
0:05:00 > 0:05:05The second test point is Item 7 which is air-to-air gun attack.
0:05:05 > 0:05:08Nat, if you can monitor the director gunsight
0:05:08 > 0:05:13and assess the aiming pipper, its stability and accuracy about the target position...
0:05:13 > 0:05:17'Nat Makepeace is the company's chief test pilot.'
0:05:17 > 0:05:22- First thing, what frequency are we working?- 36.- 36, perfect.
0:05:25 > 0:05:30'Everything about the Typhoon has been designed to be hi-tech and high value.
0:05:30 > 0:05:34'It's a quarter of a million pounds just for the helmet.'
0:05:36 > 0:05:39So what do we want from manufacturing?
0:05:39 > 0:05:43You want speed, agility, sophistication, ambition.
0:05:43 > 0:05:47Is this the single object that encapsulates them all?
0:05:50 > 0:05:53- Grab the handle round here and just...- That then goes in.
0:05:55 > 0:05:59'BAE Systems is the second biggest defence contractor in the world,
0:05:59 > 0:06:06'employing 33,000 people in this country and trading with 8,000 other British companies as suppliers.'
0:06:06 > 0:06:09See you guys later. Thanks a lot.
0:06:09 > 0:06:15'Only a fifth of its business comes from the British government. The rest comes from overseas.
0:06:15 > 0:06:21'Britain is very dependent on BAE Systems and other manufacturers to generate those export revenues.'
0:06:23 > 0:06:29- Climbing to flight level eight-zero, to flight level one-eight-zero. - 'Two-six departure.'
0:06:39 > 0:06:43Oh, my God! Oh! God!
0:06:45 > 0:06:47Ohhh!
0:06:48 > 0:06:51Whoa!
0:06:51 > 0:06:52God!
0:06:56 > 0:07:00That's Blackpool Airport on the right there. You can see the tower.
0:07:02 > 0:07:05ENGINE ROARS
0:07:06 > 0:07:12Now, obviously, you can't go and buy one of these at a showroom on your high street.
0:07:12 > 0:07:19And perhaps because you don't get to see it very often, perhaps because it's quite controversial,
0:07:19 > 0:07:25it's just one of those under-recognised manufacturing and engineering achievements.
0:07:25 > 0:07:28'But how much of an industrial force are we?
0:07:28 > 0:07:32'To answer that, you need an overview of our entire economy.
0:07:33 > 0:07:38'Well, right across Britain and all advanced nations,
0:07:38 > 0:07:41'it's services that dominate.
0:07:41 > 0:07:45'That's everything from banking to retailing
0:07:45 > 0:07:48'to distribution.
0:07:48 > 0:07:53'Services now account for three-quarters of the entire economy.
0:07:56 > 0:08:01'Manufacturing is 12% of the economy, a vitally important sector.
0:08:01 > 0:08:07'It's bigger than financial services and accounts for most of our exports.
0:08:07 > 0:08:11'We have a lot of engineering and food and drink manufacturing.
0:08:11 > 0:08:14'We're also big in chemicals and pharmaceuticals,
0:08:14 > 0:08:17'but we have let a lot of our factories go.
0:08:17 > 0:08:22'While we do sell enough overseas to pay for the vast bulk of our imports,
0:08:22 > 0:08:27'there is still a gap and we've been relying on borrowing to help plug it.
0:08:27 > 0:08:30'That can't go on.'
0:08:36 > 0:08:42It's not just me having a white knuckle ride. Our economy has had a white knuckle ride as well.
0:08:42 > 0:08:48Right now we need to start paying off debts, we need to export more, we need to import less.
0:08:48 > 0:08:53That means we're going to be relying more and more on our manufacturing sector.
0:08:54 > 0:08:59But are manufacturers capable of exporting us out of trouble?
0:08:59 > 0:09:02It won't be easy, but I think they are.
0:09:02 > 0:09:08The very forces which made us an industrial power in the first place will carry us through now.
0:09:18 > 0:09:25We're in a period of economic soul-searching, regretting the loss of our industrial past.
0:09:27 > 0:09:32But Derbyshire's Derwent Valley, birthplace of the Industrial Revolution,
0:09:32 > 0:09:35provides clues for our industrial future.
0:09:35 > 0:09:39It was here that we British invented mass production
0:09:39 > 0:09:43and laid the foundations of the wealth we enjoy today.
0:09:43 > 0:09:47It was probably our greatest contribution to mankind.
0:09:52 > 0:10:00What drove the economy to such great things back then were the same forces that drive it today.
0:10:00 > 0:10:05Three principles in particular determine our economic direction of travel.
0:10:05 > 0:10:08Now, the first rule of successful nations
0:10:08 > 0:10:12is always to move into the highest value activities they can find.
0:10:12 > 0:10:16And that means specialising in things they're particularly good at,
0:10:16 > 0:10:20hopefully, things that other people can't do so well.
0:10:20 > 0:10:26And with some great technological innovations around the time of the Industrial Revolution,
0:10:26 > 0:10:29that's exactly what they did here.
0:10:29 > 0:10:33Because it was more profitable than agriculture,
0:10:33 > 0:10:36it was towards more industry that our economy moved.
0:10:36 > 0:10:42Those early cotton industrialists also followed a second rule of successful economies -
0:10:42 > 0:10:45use the resources at hand.
0:10:45 > 0:10:50What you had here was that phenomenal water resource for the power
0:10:50 > 0:10:52and as well you've got the people.
0:10:52 > 0:10:57You've got lead mining at Cromford, you've got nail-making at Belper.
0:10:57 > 0:11:03Those are two industries where you have men working, but you don't tend to have women and children.
0:11:03 > 0:11:08And the mills were able to take the women and children and use them.
0:11:08 > 0:11:14It was a brutal business, but we developed those factories on the back of cheap labour and energy.
0:11:14 > 0:11:19And that allowed Britain to become a manufacturing giant.
0:11:21 > 0:11:24When this mill was built in the early 20th century,
0:11:24 > 0:11:30we made two-thirds of the world's cotton and over half the world's ships.
0:11:31 > 0:11:34But there is a vital third principle too
0:11:34 > 0:11:39that has governed our economy since the Industrial Revolution.
0:11:39 > 0:11:44You hardly need me to tell you that with all the wealth created around here,
0:11:44 > 0:11:47Britain comfortably became top nation.
0:11:47 > 0:11:49But there is a very important lesson.
0:11:49 > 0:11:54The world changes, others catch up and you can't cling on.
0:11:54 > 0:11:59Successful nations have to be flexible and adaptable.
0:11:59 > 0:12:03Ever since the Industrial Revolution,
0:12:03 > 0:12:07we've got rich by changing as the world changes.
0:12:07 > 0:12:12We've let our economy evolve, moving on to higher value activities
0:12:12 > 0:12:15and letting go of lower value industries.
0:12:17 > 0:12:23Leeds, for example, once grew prosperous from the rise of textiles and clothing,
0:12:23 > 0:12:26then saw it all vanish.
0:12:29 > 0:12:31It's been a traumatic process,
0:12:31 > 0:12:37but the economy benefited from the higher value enterprise that followed.
0:12:40 > 0:12:47One family firm which tells the story of how good can come out of bad is Berwin & Berwin,
0:12:47 > 0:12:52a suit manufacturing company founded in Leeds a century ago.
0:13:00 > 0:13:03It's like stepping back into the 1950s.
0:13:03 > 0:13:06The Chairman is Malcolm Berwin.
0:13:06 > 0:13:10So what was the heyday of textiles and clothing in Leeds?
0:13:10 > 0:13:18I would say probably the 1950s was the peak when there were 30,000 people working in clothing in Leeds.
0:13:18 > 0:13:23- In Leeds alone?- In Leeds alone. The street outside where we are now,
0:13:23 > 0:13:28you could go up and down there and on right and left were clothing factories.
0:13:28 > 0:13:35But all over the city, the centre of the city, some of the outskirts of the city, were clothing factories.
0:13:38 > 0:13:42'But by the '80s and '90s, the clothing industry had changed.
0:13:42 > 0:13:45'It was time to move on.
0:13:45 > 0:13:48'Britain was more affluent and expensive.
0:13:48 > 0:13:52'Poorer countries could now produce clothes effectively and cheaply.
0:13:52 > 0:13:59'They were using the resources they had to hand - low-cost labour - to supply shops in Britain.
0:14:00 > 0:14:07'As high street prices tumbled, British clothing manufacturers were hit hard.
0:14:07 > 0:14:12'It was the simple expression of the rule that you constantly need to adapt,
0:14:12 > 0:14:17'but suit-maker Simon Berwin tried to resist, despite the difficulties.'
0:14:17 > 0:14:22You noticed the profits were diminishing because you had to squeeze the margin
0:14:22 > 0:14:28- to compete against the lower priced competition?- To keep orders we had, we had to keep reducing the price.
0:14:28 > 0:14:34Because we were under pressure, we couldn't invest in new machinery, so we couldn't move the product forward.
0:14:34 > 0:14:41It was a double-edged sword. Maybe wrongly we felt proud that we were surviving, but survival isn't enough.
0:14:44 > 0:14:47The change was painful for workers too.
0:14:47 > 0:14:52Angie Butler had been travelling across the city to work in Berwins' factory
0:14:52 > 0:14:57and had already been made redundant by another clothing company.
0:14:57 > 0:15:01Over three decades, we lost almost three million manufacturing jobs.
0:15:01 > 0:15:06As factories closed, whole communities were affected.
0:15:06 > 0:15:11You'd seen all the tailoring firms just slowly declining and going down
0:15:11 > 0:15:15and you think, "What if it happens here, what are you going to do?"
0:15:15 > 0:15:18She was right to fear the worst.
0:15:18 > 0:15:24At the start of the new century, the Berwin factory joined thousands of others and finally closed.
0:15:24 > 0:15:27A very emotional and difficult period,
0:15:27 > 0:15:32my father saying goodbye to people who he had known for 30 and 40 years,
0:15:32 > 0:15:36and many people not really knowing what the future held.
0:15:39 > 0:15:42What about the day they came and told you?
0:15:42 > 0:15:45The day... Quite a shock.
0:15:45 > 0:15:47Quite a shock.
0:15:48 > 0:15:51Are people bitter about it, do you think?
0:15:51 > 0:15:54I think one or two would be, do you know what I mean?
0:15:54 > 0:15:58Because you gave your heart and soul and worked hard for a firm.
0:15:58 > 0:16:04The upsetting thing was seeing the headlines in the newspapers the following day,
0:16:04 > 0:16:09when it spelt out that we were the last clothing factory to close in Leeds.
0:16:09 > 0:16:12- You were the last? - Absolutely the last.
0:16:17 > 0:16:19Yeah, it was sad.
0:16:23 > 0:16:29It hasn't just been textiles and clothes falling victim to foreign competition.
0:16:29 > 0:16:32Shipbuilding, televisions, shoemaking, toys -
0:16:32 > 0:16:36the roll call of British industrial decline seems endless.
0:16:36 > 0:16:42Great British industries have risen and have fallen by those three simple rules -
0:16:42 > 0:16:48that you use the resources at your disposal, put them in the highest value activities you can find
0:16:48 > 0:16:52and you constantly adapt as the world changes around you.
0:16:52 > 0:16:58As things do change, it can be extremely painful, but was it all bad that industries moved abroad?
0:16:58 > 0:17:05I don't think so. In many respects, it strengthened the UK economy and made a lot of people richer.
0:17:37 > 0:17:41'This is where much of our manufacturing has come -
0:17:41 > 0:17:43'China.
0:17:47 > 0:17:53'By taking on low value work, China has benefited and it's been good for us too.
0:17:53 > 0:17:57'The same principles apply here as to us.
0:17:57 > 0:18:01'They're using the one great resource to hand - the people.
0:18:07 > 0:18:12'Shanghai - a megacity of 20 million people.
0:18:12 > 0:18:16'It's the hub of China's Industrial Revolution.
0:18:16 > 0:18:22'This region has been so successful, it's already richer than parts of the UK.
0:18:22 > 0:18:26'And it's becoming more expensive to manufacture here.
0:18:33 > 0:18:37'But outside Shanghai, it's a different story.
0:18:40 > 0:18:45'Every year, some 20 new cities crammed with factories and workers
0:18:45 > 0:18:49'are being constructed all over this vast country.
0:18:49 > 0:18:53'Their growth is often based on foreign technology and know-how.'
0:18:53 > 0:18:55Just a few more steps.
0:18:55 > 0:19:01'Longkou is just one of them and I've been told of an unmissable view.'
0:19:07 > 0:19:12OK, so there's not much of a view. This is the afternoon mist.
0:19:12 > 0:19:15It takes over from the morning mist each lunchtime.
0:19:26 > 0:19:30'This ancient Buddha is a whole ten years old.
0:19:30 > 0:19:33'In fact, everything is new around here.
0:19:34 > 0:19:39'35 years ago, this was just a small rural community.
0:19:42 > 0:19:48'Longkou is now a sprawling metropolis of 800,000 people
0:19:48 > 0:19:51'which few of us will ever have heard of.'
0:19:51 > 0:19:55China's whole industrial development has been astonishingly fast.
0:19:55 > 0:20:00What they've done in two decades, it took Britain two centuries to achieve. Why?
0:20:00 > 0:20:05They've got this very good "get rich quick" scheme - you import the technology.
0:20:05 > 0:20:12They haven't had to invent all the processes they're using. Of course, it's served them very well indeed.
0:20:12 > 0:20:16But from where have they imported some of these processes? Leeds.
0:20:21 > 0:20:28It turns out that suit manufacturer Berwin didn't die when they closed their Yorkshire plant.
0:20:28 > 0:20:31They were reborn in China.
0:20:31 > 0:20:35Berwins' new suit factory is the biggest in the world,
0:20:35 > 0:20:42making half a million outfits a year for the company's customers on the British high street and beyond.
0:20:43 > 0:20:49Now, the workers here are on piece rates, but I'm told they earn about £1.50 an hour,
0:20:49 > 0:20:51a quarter of our minimum wage.
0:20:51 > 0:20:54And they do a six-day week.
0:20:56 > 0:21:00'The move to China has slashed Berwins' labour costs.
0:21:00 > 0:21:05'According to factory manager John Fleming, that's the key to the company's resurrection.'
0:21:05 > 0:21:11Don't you think it's amazing that the entire labour cost of the suit
0:21:11 > 0:21:14is less than four quid to assemble a suit?
0:21:14 > 0:21:17Yeah, but the labour cost is only a small part
0:21:17 > 0:21:22of the total cost of producing a suit and getting it back to the UK.
0:21:22 > 0:21:29But if it's a small part, why would you choose where the factory is just on the basis of the labour cost?
0:21:29 > 0:21:33Right, we're saying here the labour cost is maybe £1.50 an hour.
0:21:33 > 0:21:36- What is it in the UK? Four times that, minimum wage?- Yeah.
0:21:36 > 0:21:42So your suit costs are going from £4 a suit labour charge to £16 a suit.
0:21:42 > 0:21:48- That's not that much, is it, on a suit?- £12 a suit, half a million suits a year, six million quid.
0:21:48 > 0:21:52That's the difference between being in business or out of business.
0:21:52 > 0:21:59'The Berwins say investment in new machinery and skills delivers better quality than they managed in Leeds.
0:21:59 > 0:22:05'As for the Chinese, they're simply following the same rules that led to our success.
0:22:05 > 0:22:10'Our low value work represents high value work here and it makes use of abundant resources,
0:22:10 > 0:22:13'in this case, cheap labour.'
0:22:16 > 0:22:22You might be feeling suit envy, wishing we were as good at this as they are.
0:22:22 > 0:22:27But we are as good at this as they are. They don't do it because they're better at it,
0:22:27 > 0:22:33but because they're not that good at anything else. It's a sign of their lack of other opportunities
0:22:33 > 0:22:38which makes them specialise in what is relatively low-paid work.
0:22:51 > 0:22:57To most Chinese living out in the countryside, the factory pay must look highly attractive.
0:22:57 > 0:23:01But it seems poor to us.
0:23:01 > 0:23:06We could compete if we paid ourselves as little, but we wouldn't want to.
0:23:10 > 0:23:15Now, you take this four-lane highway a mile or two from the factory
0:23:15 > 0:23:17and you come to the end of town.
0:23:17 > 0:23:24Suddenly, the road narrows. It's like a time portal into a different China - the countryside,
0:23:24 > 0:23:27the 20th century China from the 21st here.
0:23:27 > 0:23:33What you have to remember is that the vast bulk of people actually live in that China, not this one.
0:23:33 > 0:23:38The vast bulk of them are on incomes of less than three dollars a day.
0:23:42 > 0:23:46With so many people, no wonder China has so much to export.
0:23:47 > 0:23:53Every one of these containers in Shanghai will be crammed full of cheap goods,
0:23:53 > 0:23:55some heading our way.
0:23:56 > 0:23:58But in my view,
0:23:58 > 0:24:04they're not so much a sign of China's strength, more of its limitations.
0:24:10 > 0:24:15Seven of the world's ten busiest ports are in China.
0:24:15 > 0:24:18That's measured by the tonnage of cargo handled.
0:24:18 > 0:24:23Yes, more weight is exported from China than anywhere else in the world.
0:24:23 > 0:24:28It is impossible not to be impressed, but we mustn't be afraid of that.
0:24:28 > 0:24:33We must never confuse the volume of what China produces with the value.
0:24:35 > 0:24:40'The truth is, China is still a relatively poor country,
0:24:40 > 0:24:45'making cheap stuff, most of which it's not economic for us to manufacture any more.
0:24:45 > 0:24:48'And we've reaped huge benefits.
0:24:54 > 0:24:57'Back at Berwins' in Leeds,
0:24:57 > 0:25:04'their former factory is now a warehouse, stocked with suits they've had made in China.
0:25:04 > 0:25:08'Should we regret the fact we import suits, rather than manufacture them?
0:25:08 > 0:25:13'That might depend on whether we can find replacement jobs.
0:25:13 > 0:25:20'Angie Butler has. Now, like almost 80% of us, she works in services. She's Berwins' warehouse manager.'
0:25:20 > 0:25:26Your old colleagues here, the ones on the factory floor, what are they up to now?
0:25:26 > 0:25:30Some of them have gone in to completely different jobs
0:25:30 > 0:25:36as there's not many tailoring firms around now, so they've gone in to different jobs, doing really well.
0:25:36 > 0:25:39- Most have found something?- Yes.
0:25:39 > 0:25:43I would say the majority of them have, yeah,
0:25:43 > 0:25:47which I'm really pleased about. It's nice when you hear something good.
0:25:48 > 0:25:52'Not all displaced industrial workers have been so lucky.
0:25:52 > 0:25:59'But here's the thing. Since China began manufacturing for us in a big way a decade ago,
0:25:59 > 0:26:03'Britain has found plenty of other things to do.
0:26:03 > 0:26:08'In fact, a million more people are in work.
0:26:11 > 0:26:18'As for Simon Berwin and daughter Kate, things have never been better for their family firm.'
0:26:18 > 0:26:20It fits very well.
0:26:20 > 0:26:26'At London Fashion Week, their men's outfits are on parade in designer Paul Costelloe's show.
0:26:28 > 0:26:31'And since having every stitch made abroad,
0:26:31 > 0:26:37'turnover has gone up by ten times and theirs has become one of the biggest suit companies in Europe.'
0:26:39 > 0:26:43Could you have survived if you hadn't made the move to China?
0:26:43 > 0:26:47Absolutely not. Absolutely no, no, no.
0:26:47 > 0:26:53There is no way that the consumer and the retailer will pay the wages that are required in this country.
0:26:53 > 0:26:58Whether that's right or wrong, it's not for me to comment, but that is the real world.
0:27:03 > 0:27:08'And crucially, although Berwins' suits may be made in China,
0:27:08 > 0:27:12'the Chinese only get about 20% of the retail price.
0:27:12 > 0:27:18'Most of the rest of the money stays in Britain with the designers, transport companies, shops
0:27:18 > 0:27:20'and, of course, the Berwins.
0:27:25 > 0:27:30'And there are other benefits which most of us can share.
0:27:30 > 0:27:36'Berwins' London showroom is crammed with suits for the British high street, all made abroad.
0:27:36 > 0:27:41'They claim these suits are half the price they would be, had they been made here.
0:27:41 > 0:27:47'We've got inflation now, but we've been enjoying falling prices for a lot of goods.'
0:27:50 > 0:27:54Of course, there are downsides to moving production offshore,
0:27:54 > 0:27:58but for most British consumers, the China effect has been considerable
0:27:58 > 0:28:02and has been like an invisible pay rise.
0:28:02 > 0:28:05We're used to prices going up year after year,
0:28:05 > 0:28:09but the things made in China have become considerably more affordable.
0:28:09 > 0:28:14The price of clothing, for example, has fallen by a quarter in the last 15 years.
0:28:17 > 0:28:21The price of audiovisual equipment like radios has fallen 80%.
0:28:21 > 0:28:25Items like toys and cameras are down 30%.
0:28:25 > 0:28:30The drop in the relative price of manufactured goods that we've witnessed
0:28:30 > 0:28:35is one of those economic changes that only occurs every few generations.
0:28:37 > 0:28:43No transition is easy. We lost thousands of manufacturing jobs every month for many years.
0:28:43 > 0:28:47But when we come to look back on what's happened,
0:28:47 > 0:28:52we won't regret sending low value production to China. We can't do everything.
0:28:52 > 0:28:57Far better for us to concentrate on the high value production we've kept for ourselves.
0:28:59 > 0:29:04You see, while low value manufacturing has been journeying offshore,
0:29:04 > 0:29:08the manufacturing that stayed behind has been on a journey too -
0:29:08 > 0:29:12towards smaller, higher value sectors.
0:29:13 > 0:29:17I will tell you why we might have gone too far along this road,
0:29:17 > 0:29:24but the really important point is that this move into more lucrative sectors was, unquestionably,
0:29:24 > 0:29:28the right direction for the economy to have taken.
0:29:34 > 0:29:39'This is high-value production and it's what Britain does best.'
0:29:41 > 0:29:46- Lovely.- 'McLaren is known for success in motor racing,
0:29:46 > 0:29:51'but this is the first sports car of their own for the general market,
0:29:51 > 0:29:54'if you have £167,000 to spare.'
0:29:56 > 0:30:00- What I'll do now is we'll do a lap. - OK.- See what the car can do.
0:30:00 > 0:30:05- OK, this is... - Showing off. This is showing off its performance potential.
0:30:07 > 0:30:13'Most of these are expected to be sold abroad and that's just what we need
0:30:13 > 0:30:17'as right now we're exporting too little to pay for all our imports.'
0:30:34 > 0:30:36The suspension...
0:30:37 > 0:30:42Understanding braking and turning and accelerating...
0:30:51 > 0:30:54You don't need to sell the car! You just need to...
0:30:56 > 0:30:59..give people...a ride!
0:31:08 > 0:31:12- Did you mean to come off the track there?- Well...
0:31:20 > 0:31:27'To set up their new sports car business, develop the car and build a new factory,
0:31:27 > 0:31:30'McLaren is spending £800 million.'
0:31:32 > 0:31:37That's one of the quickest laps a car can do on that circuit.
0:31:38 > 0:31:40You OK?
0:31:40 > 0:31:44To think you could take that car on the road.
0:31:44 > 0:31:49- Did you enjoy that?- Very, very much. That is really quite...
0:31:49 > 0:31:50Ooh.
0:31:50 > 0:31:53'The ride IS breathtaking,
0:31:53 > 0:31:57'but so are the financial stakes.' If it all fails,
0:31:57 > 0:32:00how bad is that for McLaren?
0:32:00 > 0:32:05Well, putting aside the financial consequences of failure,
0:32:05 > 0:32:09which is always a very difficult pill to swallow, we're a winning machine.
0:32:09 > 0:32:15But we've got to be as disciplined and as focused as we are in Formula 1 and we should succeed.
0:32:20 > 0:32:24'So what does this discipline and focus actually mean for McLaren?
0:32:24 > 0:32:29'It's about striving to be best and high value in everything they do.
0:32:31 > 0:32:35'Even their Surrey headquarters is not your usual factory.'
0:32:49 > 0:32:50Ooh.
0:32:59 > 0:33:01Not an oil smear
0:33:01 > 0:33:03in sight.
0:33:07 > 0:33:09All right!
0:33:11 > 0:33:17This is really a film set. There's no factory or any activity here at all.
0:33:21 > 0:33:27What was with the white corridor? I came in through a long, white corridor, went through a door -
0:33:27 > 0:33:33- another white corridor. - So much of what comes into buildings is brought in by humans,
0:33:33 > 0:33:37so we clean people's feet as they go down different surface finishes.
0:33:37 > 0:33:41But we don't just do feet. We try to do it with their minds as well.
0:33:41 > 0:33:44'Level number one.'
0:33:45 > 0:33:51Why expect to make a perfect product in an imperfect environment?
0:33:52 > 0:33:56'So why has McLaren decided to branch out from racing cars
0:33:56 > 0:34:01'to sports cars? It's all back to the basic principles - you use the skills you've got.
0:34:01 > 0:34:06'And in Britain we have years of experience in motor racing.
0:34:06 > 0:34:11'At the start of the 20th century, Britain had a speed limit of 20mph
0:34:11 > 0:34:17'and there was a fear that our industry would fall behind unless cars could be tested at speed.
0:34:17 > 0:34:23'So in 1907, the world's first purpose-built motor racing circuit was built at Brooklands,
0:34:23 > 0:34:26'just down the road from McLaren.
0:34:29 > 0:34:34'Two-thirds of Formula 1 teams now build their cars in Britain.
0:34:34 > 0:34:38'Several universities have degree courses in motor sport engineering.
0:34:38 > 0:34:44'The industry employs 25,000 engineers and it generates huge export revenues, too.
0:34:49 > 0:34:53'McLaren has a turnover of £250 million a year.
0:34:53 > 0:34:57'Now it plans to leverage the wealth and expertise accrued from racing
0:34:57 > 0:35:02'to create more wealth from sports car manufacture.'
0:35:03 > 0:35:08In five years' time, we intend to have a four times bigger turnover
0:35:08 > 0:35:16and comparable profitability to those people who succeed in this particular market.
0:35:16 > 0:35:21The driving force is to be the best in the world, which means money.
0:35:21 > 0:35:27'The essence of high-value production is in selling small numbers at high prices.
0:35:27 > 0:35:31'McLaren will sell just 1,000 cars in the first year,
0:35:31 > 0:35:38'but that's worth three times Berwins' entire turnover on all those foreign-made suits.
0:35:38 > 0:35:42'What McLaren does is the reverse of the Chinese model.'
0:35:42 > 0:35:48The skill sets that exist in our organisation and the manufacturing technologies we have
0:35:48 > 0:35:52don't necessarily fit into low-cost, high-volume products.
0:35:52 > 0:35:57They tend to be relatively low volume with good margins.
0:35:57 > 0:36:01At the same time, by necessity, they have to be world-leading products.
0:36:03 > 0:36:09'OK, this is really high-end stuff, but the UK is a high-end economy.
0:36:09 > 0:36:14'Remember, successful economies always try to focus on the high value,
0:36:14 > 0:36:20'but there's a curious effect here. As manufacturing gets more successful over the decades,
0:36:20 > 0:36:22'the less we see of it.
0:36:22 > 0:36:24CLASSICAL MUSIC
0:36:28 > 0:36:33'Let me explain with the kind help of a string quartet.
0:36:33 > 0:36:37'This piece by Haydn still takes four people to play it,
0:36:37 > 0:36:41'just as it did 230 years ago,
0:36:41 > 0:36:47'but in our factories, things get faster and more efficient year by year.'
0:36:49 > 0:36:55The oddity is that the better we get at manufacturing, the fewer people we need to do it.
0:36:55 > 0:37:00No wonder you read headlines about factory job losses all the time.
0:37:06 > 0:37:12'In the two decades up to the recession, we manufactured output worth 10% more
0:37:12 > 0:37:15'with 40% fewer workers.
0:37:17 > 0:37:23'As it gets more efficient, manufacturing gets leaner and less visible.'
0:37:26 > 0:37:32In fact, it's one of economics' great paradoxes that the bits of the economy that are most dynamic,
0:37:32 > 0:37:37like manufacturing, are sometimes the ones that look to be in decline.
0:37:41 > 0:37:46It's just a fact of life that as economies progress and become more affluent,
0:37:46 > 0:37:50they transfer resources away from manufacturing to other things.
0:37:50 > 0:37:54We turn car workers into violinists, metaphorically speaking.
0:37:54 > 0:37:58That's not a sign of our failure. It's a sign of success.
0:38:24 > 0:38:29'Dynamic, efficient, high value, less visible
0:38:29 > 0:38:35'and more niche. It's not easy to keep track of manufacturing these days.
0:38:38 > 0:38:44'Take our bike industry. It's smaller than it used to be, but more specialist,
0:38:44 > 0:38:47'like Brompton, the British fold-up bike.
0:38:51 > 0:38:57'The Brompton design team wanted to show me that their bikes can be versatile,
0:38:57 > 0:39:02'even though they're sold specifically for urban commuting.'
0:39:02 > 0:39:08Brompton really is a very niche company with just one specialist product line,
0:39:08 > 0:39:14but if you can find enough small, profitable niches, you can build a large, affluent economy.
0:39:16 > 0:39:20'And a profitable niche can build an affluent company, too.
0:39:20 > 0:39:25'Amazingly, Brompton is now Britain's biggest bike manufacturer.'
0:39:27 > 0:39:33Here we have the really clever part of the factory. This is where all the frames are made,
0:39:33 > 0:39:39this is where we have all the forming, cropping and bending of the raw material to make the bike.
0:39:39 > 0:39:45'The company is turning out 30,000 bikes a year, but Managing Director Will Butler-Adams insists
0:39:45 > 0:39:47'it's not a mass-market business.
0:39:47 > 0:39:54'Even the cheapest bike costs £700 because, he says, specialist bikes like this
0:39:54 > 0:40:01- 'need to be high-precision and hand-built.'- If you look at the workmanship, perfectly lined.
0:40:01 > 0:40:03Beautiful little pools.
0:40:03 > 0:40:09And he's put his name on it. Every brazer puts their name on each part they braze.
0:40:09 > 0:40:13It would be nice if they could mass produce these one day.
0:40:13 > 0:40:19If you don't have a name to it, you can rush it, you don't care, chuck it in a pile, no one knows it's yours.
0:40:19 > 0:40:26If you put your name to something, you're proud of it. It's your workmanship for the life of the bike.
0:40:29 > 0:40:34'At the turn of the 20th century, Rover, which later became the car firm,
0:40:34 > 0:40:42'built the first truly modern bicycle - a niche product, costing over £1,000 in today's money.
0:40:43 > 0:40:48'As the century wore on, companies like Raleigh built industrial empires on bikes,
0:40:48 > 0:40:53'churning out high volumes of low-value products.
0:40:53 > 0:40:59'Affordable motorised transport and cheap foreign competition began to take their toll.
0:40:59 > 0:41:02'Britain's commodity bike business collapsed.
0:41:05 > 0:41:09'In contrast, specialisation has kept Brompton very much alive.
0:41:09 > 0:41:14'Exports of their folding bikes have been growing at 15% a year.'
0:41:14 > 0:41:17This one is going to Singapore.
0:41:17 > 0:41:20- Arizona.- Spain, Spain, Spain, Spain.
0:41:20 > 0:41:24Singapore, Singapore, Singapore. Disappearing all over the world.
0:41:24 > 0:41:27You export about two-thirds of them?
0:41:27 > 0:41:30To about 38 different countries.
0:41:30 > 0:41:34'China may make specialist bikes like these some day,
0:41:34 > 0:41:40'but they won't compete with us while we have an advantage in design, skills and branding.
0:41:40 > 0:41:46'Fortunately, as China gets richer, the more of our high-value stuff the country can afford to buy.'
0:41:46 > 0:41:49There is a lot of potential in China.
0:41:49 > 0:41:57It could be bigger than all of the world we now supply put together, but the interesting thing is
0:41:57 > 0:42:01they would only want their bikes if they were made in London.
0:42:01 > 0:42:05If we moved manufacture to China, it would ruin it.
0:42:05 > 0:42:11So we'd better employ a few more people and make a few more bikes and sell a few more in China!
0:42:15 > 0:42:19'Brompton shows that dynamic companies and economies
0:42:19 > 0:42:23'are built on the back of doing things others can't do,
0:42:23 > 0:42:27'rather than competing with them in things they can.'
0:42:30 > 0:42:37British manufacturing has followed a particular direction towards narrower and more lucrative markets.
0:42:37 > 0:42:43But there's another interesting characteristic of British industry - its openness to the world.
0:42:43 > 0:42:47About a third of British manufacturers are foreign-owned.
0:42:47 > 0:42:53That doesn't mean we're not making things. It means investment and expertise from overseas
0:42:53 > 0:42:57is helping ensure we're as good as the best.
0:43:11 > 0:43:15'Just look at Jaguar Land Rover. A great British company?
0:43:15 > 0:43:21'Well, it still manufactures here, but like most of our motor industry it's now owned by foreigners.
0:43:21 > 0:43:24'And flourishing for it.
0:43:24 > 0:43:28'To appreciate how overseas influence has brought benefits,
0:43:28 > 0:43:35'we should think back to the 1970s when this company was British through and through.'
0:43:35 > 0:43:37JEERING
0:43:44 > 0:43:50What did you find on your first day in your new job as chairman and managing director of Jaguar?
0:43:50 > 0:43:54Well, before I started at Jaguar, I'd just had a two-week skiing holiday
0:43:54 > 0:43:57and only arrived back the day before.
0:43:57 > 0:44:02I went into work on Monday morning and when I got there everybody was on strike.
0:44:05 > 0:44:11'Chaos in the car industry resulted in production standards that were comically poor.
0:44:11 > 0:44:15'Vehicles without lights were just the start.'
0:44:15 > 0:44:19The quality was so bad we were repainting every body,
0:44:19 > 0:44:23- knocking out the dents and... - Oh, no.
0:44:23 > 0:44:25So we were painting everything twice.
0:44:25 > 0:44:31If I said to you, what went wrong with the British motor industry in the 1970s...?
0:44:31 > 0:44:35The trouble was, it... Everything was wrong.
0:44:35 > 0:44:39'We've remembered this painful period ever since,
0:44:39 > 0:44:45'but what's less well appreciated is the quiet revolution which was to transform British car making
0:44:45 > 0:44:50'and our entire industrial landscape.
0:44:54 > 0:45:01'First, it was the Japanese with their new ways of doing things that helped us.
0:45:01 > 0:45:05'We lacked good management in the motor industry and were out of date,
0:45:05 > 0:45:10'so when the Japanese began to open new car plants in Britain,
0:45:10 > 0:45:15'we had the good sense to learn from those who could do it better.'
0:45:16 > 0:45:21What the Japanese brought to Britain was order, efficiency,
0:45:21 > 0:45:25perhaps even a kind of beauty to the art of manufacturing.
0:45:25 > 0:45:29Their methods had special names like Kanban
0:45:29 > 0:45:34and Kaizen, meaning continuous improvement or change for the better
0:45:34 > 0:45:39and that was certainly something the British car industry needed.
0:45:40 > 0:45:44'Their methods didn't just revolutionise car making.
0:45:44 > 0:45:48'They were taken up by just about every manufacturer in Britain,
0:45:48 > 0:45:53'just like the one in this nondescript Birmingham street.
0:45:58 > 0:46:04'Like so many of our companies these days, GKN doesn't make finished products in this factory,
0:46:04 > 0:46:09'but it does make vital parts for almost half the cars in the world -
0:46:09 > 0:46:13'shafts that transfer power from the engine to the wheels.
0:46:13 > 0:46:19'Like the rest of the British automotive industry, GKN was struggling in the late 20th century.
0:46:19 > 0:46:25'The Japanese didn't take over, but their influence was profound.'
0:46:26 > 0:46:32If you look at the productiveness of this cell, in comparison to the 1970s and 1980s,
0:46:32 > 0:46:37- we'd have had a lot of men involved in manufacturing these parts.- Yeah.
0:46:37 > 0:46:39This cell typically works with one.
0:46:39 > 0:46:45'The Japanese system was all about continuous improvement, eliminating waste
0:46:45 > 0:46:49'and creating a more harmonious working environment.'
0:46:49 > 0:46:56- White. White machines, white equipment.- This is about the way we organise our production facilities.
0:46:56 > 0:47:00There's a much greater emphasis on the quality of our product.
0:47:00 > 0:47:04We measure quality in the automotive industry in parts per million -
0:47:04 > 0:47:09- how many rejects we have per million parts delivered.- Right.
0:47:09 > 0:47:15So back in the '70s and '80s, most companies were maybe in the 300-400 parts per million.
0:47:15 > 0:47:19We're now less than... Well, we're in single digits.
0:47:20 > 0:47:27'GKN now uses Japanese systems in all its factories throughout the world.
0:47:27 > 0:47:29'Its fortunes have been transformed.
0:47:29 > 0:47:36'We invented the factory for the rest of the world, but the rest of the world has refined the idea.
0:47:36 > 0:47:39'No shame in that.
0:47:45 > 0:47:49'As well as allowing the Japanese to influence how our companies worked,
0:47:49 > 0:47:54'we allowed them to create a whole new motor industry in this country from scratch.
0:47:54 > 0:47:58'Britain's biggest car maker is now Nissan.
0:47:58 > 0:48:06'It's back to economic principles again and using the resources at hand - foreign expertise.'
0:48:06 > 0:48:12What the Japanese did was fill in the gaps. Where we lacked talent, they provided it.
0:48:12 > 0:48:17And, in effect, instead of going it alone, we became part of a global car industry.
0:48:17 > 0:48:23That's been the story of our nation. We are more globally integrated than other large economies.
0:48:23 > 0:48:30That's not great news for ardent nationalists what want to see British products with British flags,
0:48:30 > 0:48:33but it has kept us very productive.
0:48:33 > 0:48:40'We haven't just let foreigners show us how to make things better. We've let them invest, too.
0:48:40 > 0:48:43'They've now bought up most of our motor industry.
0:48:43 > 0:48:47'Jaguar Land Rover's latest owners are the Indian Tata group.
0:48:47 > 0:48:51'Some might say our property has fallen into foreign hands,
0:48:51 > 0:48:56'but you could say their investment money keeps falling into ours.'
0:48:56 > 0:49:01We were fortunate that BMW purchased the company
0:49:01 > 0:49:05and they invested a lot of money within Land Rover products.
0:49:05 > 0:49:08Then, after BMW, Ford.
0:49:08 > 0:49:13Ford invested another shed load of money, which was rather good.
0:49:13 > 0:49:16And now we're owned by Tata.
0:49:18 > 0:49:23'Our motor industry now builds about 1.3 million cars a year
0:49:23 > 0:49:28'and contributes about 10% of the country's entire exports.
0:49:28 > 0:49:32'Letting foreign companies and foreign techniques into Britain
0:49:32 > 0:49:37'hasn't brought the end of UK manufacturing, but its salvation.
0:49:40 > 0:49:46'It all adds up to a British industrial base that has learnt to focus on what it does well,
0:49:46 > 0:49:52'dispensing with the rest. It makes perfect sense, but it raises an important question:
0:49:52 > 0:49:59'is our manufacturing sector big enough to carry our enormous economy?'
0:49:59 > 0:50:03It's manufacturers we mainly rely on to export.
0:50:03 > 0:50:06So it's they who earn the money to pay for imports.
0:50:06 > 0:50:13Given that we import far more than we export, you've just got to worry that the sector's simply too small
0:50:13 > 0:50:17to shoulder the enormous burden it has to carry.
0:50:26 > 0:50:28'Back at BAE Systems,
0:50:28 > 0:50:34'our biggest manufacturer sums up British industry's strengths and weaknesses.
0:50:37 > 0:50:44'Yes, it's high-end, lean, specialised, globally-integrated and innovative,
0:50:44 > 0:50:48'but there simply aren't enough companies of this size.
0:50:53 > 0:51:00'BAE has followed the UK trend, narrowing its range, exiting civil aviation,
0:51:00 > 0:51:06'focusing on security and defence and the complex manufacturing end of it at that.'
0:51:09 > 0:51:13It's not done with just a few bolts. It's more like micro-surgery.
0:51:15 > 0:51:19- It's all quite delicate? - These aircraft are hugely strong.
0:51:19 > 0:51:24A Mini is 1.5 tonnes. You could put 63 Minis on a Typhoon wing.
0:51:24 > 0:51:30'It's advanced, but BAE Systems can't exist on Typhoons alone.
0:51:30 > 0:51:35'It has to keep adapting as the rest of the world catches up.
0:51:38 > 0:51:44'So in the deserts of Australia, they've been testing the next big thing - Mantis,
0:51:44 > 0:51:48'the pilotless reconnaissance plane that flies and thinks for itself.
0:51:48 > 0:51:53'BAE Systems has now signed a deal with the French to develop it further.'
0:51:53 > 0:51:57There's a really important change in defence aerospace happening,
0:51:57 > 0:52:02perhaps ranked alongside the move in naval terms from sail to steam,
0:52:02 > 0:52:07where we go from manned aircraft to unmanned aircraft.
0:52:07 > 0:52:13The consequences of standing still and not actually striving to be out in front of the others
0:52:13 > 0:52:17is simply that you lose the race and the enterprise collapses.
0:52:17 > 0:52:24It's why we're focused on not just the next big thing, but the thing after that and after that.
0:52:26 > 0:52:33'For now, the planes are manned, still carrying the occasional passenger like me.
0:52:34 > 0:52:37'Now the bad news.
0:52:41 > 0:52:45'BAE Systems generates about £4 billion of exports a year,
0:52:45 > 0:52:50'but last year we imported £30 billion more than we exported,
0:52:50 > 0:52:55'a huge gap that has to be plugged with yet more borrowing.
0:52:55 > 0:52:57'Elite our manufacturing may be,
0:52:57 > 0:53:02'but it's not big enough to meet the task at hand.
0:53:11 > 0:53:15'So why might we have too little manufacturing?
0:53:15 > 0:53:19'This is where we come to our role in the economy, you and I.
0:53:21 > 0:53:26'For many years, we've been more interested in buying things than making them.
0:53:26 > 0:53:31'In the Derwent Valley, where the Industrial Revolution started,
0:53:31 > 0:53:33'you see the shifting priorities.
0:53:33 > 0:53:39'This old textile mill - the plan is to convert big chunks of it into flats
0:53:39 > 0:53:44'to buy and to furnish. And look at this other old mill.
0:53:44 > 0:53:51'It could be fitted out as a brand-new factory, but no. It's a complex of shops.
0:53:52 > 0:53:56'This industrial site once made oils and soaps.
0:53:56 > 0:54:01'Now it's made way for cars, a roundabout and more homes for sale or rent.
0:54:03 > 0:54:09'Our decision to spend rather than save doesn't just affect the landscape of old industrial towns.
0:54:09 > 0:54:14'It has enormous consequences for our entire economy.
0:54:16 > 0:54:20'It's our savings that pay for the tools manufacturing needs.
0:54:20 > 0:54:27'We put money in a bank or pension, which is invested in companies that need cash for plant or machinery.
0:54:29 > 0:54:35'The economics may be complex, but the biggest industrial nations, like Japan and Germany,
0:54:35 > 0:54:38'save and invest a lot and manufacture and export a lot.
0:54:44 > 0:54:49'So is this where Britain has gone wrong, saving too little?
0:54:49 > 0:54:55'The old principle applies - economies use the resources at hand as best they can.
0:54:55 > 0:55:01'Take away the capital for investment, you'll have less plant and machinery, less manufacturing.'
0:55:03 > 0:55:09Funny to think, isn't it, that the amount you and I save and borrow, or that the government does
0:55:09 > 0:55:13could affect manufacturing, but I think it does.
0:55:13 > 0:55:20If we have our heads screwed on and know what we're doing financially, put enough aside for our retirement,
0:55:20 > 0:55:26well, then no problem. The manufacturing sector we have is probably the one the nation needs.
0:55:26 > 0:55:32If, though, we've been making mistakes, living too much for the present, not saving enough,
0:55:32 > 0:55:38then there's every reason to think we've let too much manufacturing go.
0:55:41 > 0:55:48'So what to conclude? The manufacturers I've met are all working hard to sell more,
0:55:48 > 0:55:56'but given our export gap, we'd need another 36,000 companies the size of Brompton to pay our way.
0:55:58 > 0:56:04'It's a tall order and Will Butler-Adams feels things have to change.'
0:56:04 > 0:56:08Without a manufacturing base, an innovative base of creating things,
0:56:08 > 0:56:12ultimately we can't sustain our economy on services alone.
0:56:12 > 0:56:14I think we've learnt that.
0:56:14 > 0:56:21Hopefully we've learnt that enough to change the balance of the economy to bring manufacturing back up.
0:56:22 > 0:56:28'Britain desperately needs a boost in performance from industry and exports.
0:56:28 > 0:56:31'It'll be a long road, but we have made a start.
0:56:31 > 0:56:38'Post-financial crash, we're saving more and manufacturing is beginning to grow.
0:56:38 > 0:56:40'There are reasons for confidence.'
0:56:40 > 0:56:46We have the ability, we have the mentality, we have the history, we have the expertise,
0:56:46 > 0:56:51we're innovative, we're imaginative, we're creative.
0:56:51 > 0:56:53We should have more self belief
0:56:53 > 0:56:59and less doubt about what we can achieve if we put our minds to it.
0:56:59 > 0:57:04'So yes, we need to do more, but contrary to the impression so many have,
0:57:04 > 0:57:08'we CAN manufacture when we put our minds to it.'
0:57:08 > 0:57:14When you look at the industry in the UK, it doesn't look like the dark, satanic mills
0:57:14 > 0:57:18with blackened-faced workers coming out at the end of a shift.
0:57:18 > 0:57:24It's a modern, hi-tech environment, which you can't discern from outside.
0:57:24 > 0:57:29We tend not to have been out and about trumpeting it in the way we could have done.
0:57:33 > 0:57:39Ultimately, manufacturing is all about the physical, the cloth or the metal or machines.
0:57:39 > 0:57:44It's incredibly important to the UK with no sign of that ever changing,
0:57:44 > 0:57:48but if I make one observation about the factories I've visited,
0:57:48 > 0:57:55it's that all the improvements have come out of the thinking, rather than the manual work.
0:57:55 > 0:58:01So the ironic thing is that the future of manufacturing, for all its physicality,
0:58:01 > 0:58:04depends much more on our brains than our hands.
0:58:06 > 0:58:10'And that's what I'll be examining next time on Made In Britain.
0:58:10 > 0:58:15'What does innovation and creativity contribute to the economy?
0:58:15 > 0:58:20'How can brand power and brain power help solve the nation's problems?'
0:58:22 > 0:58:26To discover more about how Britain pays its way in the world
0:58:26 > 0:58:32and to contribute your experiences to the Open University's online toolkit, visit:
0:58:35 > 0:58:38And follow the link to the Open University.
0:58:54 > 0:58:58Subtitles by Subtext for Red Bee Media Ltd - 2011
0:58:59 > 0:59:01Email subtitling@bbc.co.uk