AS THE wind rattled around the site of the former British Steel works at Ravenscraig last week, there was a ghostly aura of déjà vu. Nine years after the plant closed, killing off 3,600 jobs, the handful of Scottish steelworkers who survived the cull were served another chilling reminder that their industry is running on borrowed time.
In another dark week for British jobs, Corus, which embraces British Steel and is still the country's largest steelmaker, announced on Monday it was laying off 2,000 of the 20,000 workers it employs in the UK.
Although only 80 of those positions
will go from its three plants north of the border, it was enough to send a shiver through the already enfeebled Scottish manufacturing sector, which has lost more than 100,000 jobs in just over 10 years.
The same question was beginning to prey on the minds of industrialists and policymakers: does manufacturing still have a future in Scotland and the rest of the UK?
Summing up the funereal mood, GMB union official Joe Morgan described the Corus announcement as "another body blow for an already beleaguered engineering industry".
Aware that British manufacturers may soon be running on empty, business secretary Peter Mandelson fought back a day later with a £2.3bn rescue package to salvage some of the 800,000 jobs tied to UK car makers. The money was presented as a "reinvention" of the industry focusing on low carbon technologies, but it wasn't long before headlines appeared on another government bailout – the third in as many months.
With concerns growing that successive cash injections into the economy are having little impact, industry groups and unions gave the scheme a lukewarm reception. There was some enthusiasm around the £35m sum set aside to re-train employees to work with greener vehicles, but there was still a prevailing pessimism over whether the package would save jobs and prevent yet another industry from being condemned to the history books.
Gunning for a fight after his return to the Tory frontbench, shadow business secretary Ken Clarke called the package "small beer", saying it was not ambitious enough to secure the sector's long-term future.
Even attempts by the Scottish Government to lift the mood on Tuesday appeared to fail when engineering groups pointed out that its much publicised campaign to attract 1,000 new recruits to Scottish shipbuilding was "nothing new".
The campaign was built around the Ministry of Defence's £3.2bn contract to build two Royal Navy aircraft carriers at shipyards in Govan and Rosyth, but Peter Hughes, chief executive of trade body Scottish Engineering, said the companies involved began the recruitment process last July when the contract was signed. "We are very grateful for the Scottish Government raising the profile of apprenticeships and the sector, but I'm a bit sceptical because we have heard this all before," said Hughes.
As if manufacturers hadn't suffered enough, computer giant Hewlett-Packard hammered another nail in the coffin when it announced on Wednesday that up to 153 positions will be lost at its plant in Erskine, Renfrewshire. The news sent policymakers into a tailspin.
Just days after signing off his car deal, Mandelson was forced back into further meetings with groups including the CBI and unions about how to save jobs across the wider manufacturing sector. The business secretary is due to address the CBI's annual manufacturing dinner in Birmingham on Thursday and hopes are high that further measures to safeguard jobs are on the cards.
But with warnings that the UK is poised to become "Reykjavik-on-Thames" if the Treasury extends its already overstretched budget, what more can policymakers and employers do? Could 2009 mark the death of British manufacturing?
Immediately after news of the Corus lay-offs broke, there were heckles about how UK manufacturers are competing on an uneven footing compared to the rest of Europe.
It emerged that the Anglo-Dutch firm, which is now owned by the Indian conglomerate Tata, is making 1,500 fewer redundancies in the Netherlands after the Dutch Government agreed to subsidise the salaries of some employees who will work a shorter week. Similar schemes have been adopted in France and Germany and as of Friday, around 2,500 employees at Japanese motor giant Honda's plant in Swindon are taking a paid sabbatical for four months.
According to the Chartered Institute of Personnel and Development (CIPD), UK policymakers and employers are risking the country's ability to bounce back after the recession if similar initiatives are not adopted e to hold on to crucial skilled workers.
"It could be that this makes a difference between some businesses going under completely and their long-term survival," says John Philpott, chief economist at the CIPD. "If you can tide a company over, you not only protect the jobs but also the business."
Although unemployment is an inevitable consequence of recession, Philpott warns that sectors such as manufacturing and construction – where a significant number of firms are cutting staff – are in danger of never recovering. He says an entire workforce could be lost as unemployed workers retrain and transfer to other industries. "An individual company could lose employees to another business which would make it difficult for it to compete with rival firms when the recovery comes. But the other danger is the workforce of entire industries could be lost to another sector," he says.
The CIPD is among a swelling mass of organisations calling on the Government and employers to consider short-term measures to maintain employment, and to ensure that skilled workers are available when economic conditions improve.
So far Mandelson is understood to have expressed strong opposition to initiatives such as a subsidised four-day week, or Government grants to train employees who are not needed at work. It is thought he is concerned that the taxpayer will end up bailing out "lame ducks", unsustainable businesses which should be left to wither. There are also fears that disingenuous firms will take the subsidies but proceed with large-scale redundancies all the same.
The Trades Union Congress insists such measures are only likely to be temporary until banks resume normal lending. Several of the unions continue to lay the blame squarely at the banking industry's door, arguing that many of the manufacturers' problems are not due to systemic problems within the sector. They say viable businesses are struggling due to harsher lending criteria, and temporary consumer fright.
"There should be a wage subsidy, a bit like the one they have in Holland, as the best way of making sure people don't get laid off for short-term credit problems," says Adam Lent, head of economics at the TUC.
It is also putting pressure on Mandelson to draw up a long-term industrial strategy for the UK after the business secretary himself admitted: "For the future, Britain needs an economy with less financial engineering and more real engineering."
Lent adds: "We need to identify what are the really high growth sectors that will back us out of recession."
However, in Scotland's case, economists warn that the manufacturing sector needs more than just four-day weeks and other temporary sticking plasters to breathe new life into industry.
The latest statistics from the Scottish Government highlight the continual decline of Scottish manufacturing, which economists say has never recovered from the harsh blow of Ravenscraig.
Between 1998 and 2006, Scotland's total manufacturing output declined by 7.6%, from £41bn to £37.9bn. CBI Scotland's latest industrial trends survey also offers little hope for future. This month's survey showed new order volumes fell at their sharpest rate since October 2001.
Despite welcome orders such as the MoD aircraft carrier contract, economists argue that the days when millions of Scots left their homes for a hard day's work down at the factory are "dead". Lower costs render it near impossible for many Scottish firms to overcome the mass manufacturing might of countries such as China and India in traditional areas such as textiles and steel.
But Robert Hannah, head of Grant Thornton in Scotland, suggests that amid the gloom there are some hopeful signs of life in highly specialised, niche areas. He says that with good ideas, and by making use of the research and qualified graduates coming out of Scottish universities, Scotland can steal a march on countries such as China and build successful companies focused on unusual and often hi-tech areas.
Aggreko, the Glasgow-based temporary power supplier, is hailed as one of the best examples of a successful niche manufacturer. The firm, which now has offices around the world, has powered events such as Barack Obama's inauguration in Washington, and is set to announce annual profits of close to £200m next month. It is spending £20m over the next three years on a new manufacturing base in Dumbarton.
Hannah says there is an army of other niche manufacturers bringing up the rear. For example, PW Hall, a family company based in Kirkintilloch near Glasgow, which produces colour pigments for cables and wires. It has a turnover of £10m and has seen profits increase by 15%-20% over the past couple of years thanks, in part, to targeting new export markets in India and the Middle East.
Blair Syme, operations director at PW Hall, says his firm's recent success has been down to a willingness to let go of the traditional idea of manufacturing and identify new, untapped niches. He says: "Like a lot of companies in manufacturing, we have seen that the chance of making money out of (traditional] commodity products has ceased to exist and have moved into the niche areas which have more added value."
Hannah, of Grant Thornton, insists that if other manufacturing firms in Scotland are to survive, they will have to adopt a similar approach. He argues policymakers need to encourage these changes, and look at how graduates and the existing workforce can be retrained to develop new markets.
"There has been an impression over the last 20 years in the UK that we don't need manufacturing any more because we can get it cheaper in China. We need to reconsider that," Hannah says. "We need to think as a nation about what we are going to have as a base for our economy and I genuinely think if we have the right training then you could really drive some value in Scottish manufacturing."
Hughes, of Scottish Engineering, agrees. But he also says Scottish policymakers have to keep an open mind about areas where Scotland already has a competitive edge, for example in nuclear energy and defence. He points out that although Scotland recently won the MoD aircraft carrier contract, after the initial order is complete shipyards will only be required to produce one vessel a year, which won't maintain the thousand extra apprentices currently being recruited.
Hughes is concerned that the SNP Government's tough stance on nuclear, in particular its refusal to contemplate further nuclear submarines at Faslane, could prevent the MoD from awarding Scotland more defence contracts in future. Similarly, he fears thousands of workers will be lost from the nuclear energy sector.
"They (the SNP administration] are saying to the MoD, 'Yes, we'll take your aircraft carriers but we don't want your nuclear submarines at Faslane'. That's nonsensical. There are 10,000 or more jobs in and around the Faslane area that are dependent on Faslane. The defence industry is very important to Scotland. It's concerning for the Scottish Government to be hinting to the MoD that it's not open for contracts."
But as manufacturers return to their industrial estates to start another working week tomorrow, economists say that in the short-term all eyes will continue to focus on the banks and the all-important question gripping the nation: will they start lending again? As one manufacturer said: "We can but pray."
