ownership and fragmentation in uk manufacturing - prof. richard harris
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Presentation from https://storify.com/ONS/changing-shape-of-manufacturing-in-the-ukTRANSCRIPT
Ownership and fragmentation in UK manufacturing
presentation by Richard Harris
This work contains statistical data from ONS which is Crown copyright and reproduced with the permission of the controller of HMSO and Queen's Printer for Scotland. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. Source of material: Recent micro-economic trends in the manufacturing sector (submitted to Foresight project on the Future of Manufacturing by John Moffat (Durham University).
Overview
• Foreign ownership of manufacturing
• Fragmentation
– Ownership structure of plants and firms
– Rise in intermediate input usage
– Relationship between manufacturing and services
Rise of foreign ownership
0
10
20
30
40
50
60
70
80
90
100
0
50
100
150
200
250
300
350
400
1973 1978 1983 1988 1993 1998 2003 2008
£ B
illio
ns
£ B
illio
ns
UK (left axis) Foreign-owned (left axis) SE Asia (right axis)
EU (right axis) USA (right axis) Aus/Can/SA (right axis)
Real Gross Output by Country of Ownership in UK Manufacturing, 1973-2009 (2000 prices)
Implication (I): R&D spending
0
2
4
6
8
10
12
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
£ B
illio
ns
UK Foreign
R&D expenditure (2005 prices) by ownership status in UK Manufacturing, 1997-2008
0
2
4
6
8
10
12
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
£ B
illio
ns
UK-owned - UK Funding UK-owned - Foreign Funding Foreign-owned - UK Funding Foreign-owned - Foreign Funding
Sources of Funding for R&D Expenditure (2005 prices) in UK Manufacturing, 1997-2008
Implication (II): Productivity growth
Fragmentation – ownership structure
• Outsourcing – To plants in different locations (same firm) – To firms in different locations – To plants/firms in different sectors
• Why? – Rise of ICT combined with concentration on ‘core activities’ (economies of scope) – Lowering cost of transportation and lower costs of inputs in other locations
0
50
100
150
200
250
300
350
400
450
500
1973 1978 1983 1988 1993 1998 2003 2008
£ B
illio
ns
Gross Output Gross Value Added Intermediate Inputs
Real Gross Output, Gross Value Added and Intermediate Inputs in UK Manufacturing, 1973-2009 (2000 prices)
0
20
40
60
80
100
120
140
160
1973 1978 1983 1988 1993 1998 2003 2008
Single-Plant Firms Multi-Plant Firms
Average plant size for multi-plant and single-plant firms UK manufacturing, 1973-2009
-
1
2
3
4
5
6
7
1973 1978 1983 1988 1993 1998 2003 2008
Mill
ion
s
Single-Plant Firms Multi-Plant Firms
Single-Industry Firms Multi-Industry Firms
Employment in Multi-Plant and Single-Plant and Multi-Industry and Single-Industry Firms in UK manufacturing, 1973-2009
Fragmentation – use of intermediate inputs
0.40
0.45
0.50
0.55
0.60
0.65
1973 1978 1983 1988 1993 1998 2003 2008
Plants in Single-Plant Firms Plants in Multi-Plant Firms
Median Ratio of Intermediate Inputs to Real Gross Output in UK Manufacturing, 1973-2009
40%
45%
50%
55%
60%
65%
70%
75%
80%
85%
90%
1973 1978 1983 1988 1993 1998 2003 2008
Percentage of Multi-Plant Firms that operated in more than industry in UK Manufacturing, 1973-2009
Fragmentation – relationship between
manufacturing & services
0
1
2
3
4
5
6
7
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Mill
ion
s
Manufacturing Non-Manufacturing
Employment in UK Manufacturing and Non-Manufacturing of firms operating plants in both sectors, 1997-2009
1.6 1.2
5.0 7.0
3.1 1.7
10.3 9.8
27.5 23.3
11.1
5.1
7.5
10.1
11.7
13.5
2.5
2.6
19.6 25.8
0
10
20
30
40
50
60
70
80
90
100
1997 2009
Mining & quarrying Construction Sales & repairs Wholesale
Retail Hotels & restaurants Transport & storage Business services
Recreation, cultural & sport All other services
Distribution of Employment across other sectors for Firms with Manufacturing Plants, 1997-2009
0
20
40
60
80
100
120
140
160
180
200
1973 1974 1975 1976 1977 1978 1979 ~ 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
£ B
illio
ns
Purchases of Materials & Fuel Purchases of Services
Purchase of intermediate inputs in UK manufacturing, 1973-79, 1994-2009 (2000 prices)
Thank you