De-Deindustrialisation

After decades of deindustrialisation, the next Labour government can reboot the areas left behind  - by laying foundations for a digital industrial revolution.

If you want to see the future, head to New York’s Fordham Road Metro station, right in the heart of the Bronx, and walk round the block to Morris Avenue. There, in the back rooms of a Lutheran church, the Bronx Innovation Factory has community-owned and operated 3D printers, laser engravers, and a robot milling machine. Inside, training programmes are in full-swing and locals with a bright idea can turn it into prototyped and 3D-printed reality.

The Bronx is the poorest county in New York, with nearly a third of its residents living in poverty, and one of the poorest counties in the whole of the US. It’s not the first place you might think of when you hear the term ‘advanced manufacturing,’ but that’s the vision behind the Innovation Factory: that changes in technology can place the means of production back into the hands of places that have too long been treated as bywords for economic decline.

What’s made this possible is the huge, and continuing, shift in how production can be organised. When we think of manufacturing, we think about the huge, centralised factories that have dominated since the Industrial Revolution: cotton mills in Lancashire, car factories in Detroit, phone assembly plants in Guangzhou. Richard Arkwright’s factory, the first successful water-powered mill in the world, opened in 1771 and employed 1,150 people at its height. Foxconn’s Shenzhen plant today employs 450,000.

The factories got bigger because of what seemed to be a simple economic rule: that operating at a bigger scale allows a more fine division of labour, each job in the factory being divided into smaller and smaller tasks, and more efficient use of resources. There was an enormous economic incentive on the part of those owning capital to push for scale — and scale still matters. Tesla’s Gigafactory, churning out electric cars (and their batteries) in the Nevada desert, is expected to be the biggest building in the world when it is completed.

By linking up that huge scale of production with the falling costs of transport — think container ships from China — the last forty years have seen the creation of a vast, global market. The sheer variety of products to buy has grown enormously, while the price of them (especially electronics) has plummeted.

Deindustrialisation and climate change

But we also know that this new world of consumption has come at enormous cost, aided and abetted by successive governments. Manufacturing employment in Britain has collapsed in two waves: the first, the better-known, under the Conservative government of Margaret Thatcher, who oversaw the loss of more than 1.5 million manufacturing jobs during her first term in office. The second, more subtle, was under the New Labour government of Tony Blair, who oversaw the loss of 1.1 million jobs by the end of his second term in office. As a share of total employment, manufacturing fell from one in five jobs of all jobs in the early 1980s to one in twelve by 2018.

The process wasn’t inevitable. Other countries, similar to Britain, have maintained their manufacturing bases, with Germany the outstanding example in Europe. It happened primarily because governments allowed it to happen. When set against the great forces reshaping the world economy, we needed governments prepared to intervene and support industry, and we did not have them.

The results of this deindustrialisation, now stacked up over many years, have been devastating. Solid, well-paid, often unionised jobs in manufacturing have too often been replaced with insecure, poorly-paid work in services. Whole areas of the country fell off an economic cliff sometime in the recent past, and have never truly recovered. Worse, they have suffered the impact of austerity since 2010, paying for a financial crisis they did not cause.

But this globalisation had another impact, one we are now becoming painfully aware of. It’s the impact that has been building up since those very early years of the Industrial Revolution, as water power gave way to coal, and coal was surpassed by oil. It’s the impact generated every time one of those container ships sets sail, or a flight is taken, or a lightbulb switched: it’s the cumulative impact of billions of tons of fossil fuels burned over two centuries since the Industrial Revolution.

The volume of emissions has continued to rise, despite global attempts to restrain them from the early 1990s. Climate change is a byproduct of globalisation as much as it is of the industrial society in general. We will all now spend the rest of our lives living in a world shaped by this phenomenon, and every political decision we make from here onwards will have to be bent towards dealing with it. These are the twin challenges that any socialist industrial strategy has to confront.

But there is something more subtle, too. We’re all faced with a world that seems dangerously out of our control. Those in charge often do not know what they are doing, as the global financial crisis demonstrated, and care little for the rest of us if they do, as austerity showed. Climate change is already disrupting our lives. Fairbourne, on the North Wales coast, is the first place in the country to be evacuated due to climate change, the local council claiming it can no longer afford to provide protection against rising sea levels. Every year, wildfires spread across peat moors and floods threaten lowland areas.

Decisions are taken about our economy with little reference to how we actually live, from the disappearance of high street chains to the closure of car plants. And then at work itself, with the erosion of trade union rights, the spread of insecure work, and the growth of electronic monitoring, we are subject to the whims the labour market and corporate hierarchies. Alienation is the dominant feature of the society in which we live.

It’s little wonder the demand to ‘take back control’ resonated with so many in the summer of 2016. That’s why economic democracy and decentralisation is the most important part of Labour’s new approach to economic policy. By giving ownership over productive assets back to the people who work with them, and the people who should benefit from them, we are reasserting a fundamental right over the economy and how it operates.

A Smaller, Socialist Future

Industrial strategy gets treated sometimes as if it’s all about focusing on a few big winners — concentrating on providing highly-skilled jobs in a small number of key industries or areas. For decades we’ve had what one senior Treasury mandarin called the ‘most successful piece of British industrial policy ever’, fixated on providing a handful of well-paid jobs in the City of London.

Vince Cable, as business secretary in the coalition government, pushed for an industrial strategy centred on ‘high value-added’ exports. The current government fixates on a few glamour industries — artificial intelligence and driverless cars amongst them. These are undoubtedly important, and deserving of more support than the tepid approach the Tory government actually gives them, but it’s not enough to turn our economy around.

It’s great that Oxford has new companies working on the software behind self-driving cars, but a few more well-paid, highly-skilled jobs there aren’t going to do much for Merthyr Tydfil or Bury, or much for the rest of the country. New Labour’s solution, of taxing the hotspots and spending a bit more elsewhere, isn’t going to cut it either. It’s too dependent on someone else’s success, it’s too easy for future governments to rip up (as the Tories have done since 2010). A Labour government shouldn’t think of parts of the country as if only fit for handouts. We want to restore pride and dignity to places that have been sapped of both, and to do so we’ll have to fundamentally restructure our economy.

The real tragedy here is that if we concentrate only the on the obvious hotspots, we miss the huge potential across the whole country. This is a highly-educated, literate, and digitally-aware society. There are huge resources simply left idle by economic policies that concentrate on places that are already doing well. The opportunity today is that we have the technologies that might make accessing that potential possible.

Two developments are opening up this possibility. The first is the growth of what gets called ‘distributed manufacturing.’ Distinct from the older model of manufacturing, where one large factory would churn out standardised goods for consumers a long way off, distributed manufacturing relies on far smaller plants that can churn out customised products, close to their markets.

3 printing is the most obvious technology associated with this. Costs have plummeted, with viable 3 printers available for as little as $49, but at the same time their quality and sophistication has improved. Already, there are companies across the country offering access to the smaller-scale production 3D printing can provide, and future advances could include the personalisation of medicine, including even the 3D printing of replacement human organs. But the rise of the ‘maker’ movement demonstrates another, less sci-fi version of the same process — shared spaces, like Building BloQs in north London, that provide cheap, shared access to machine tools, allowing economically viable production to take place on a far smaller scale than previously seemed possible.

These technologies can work anywhere. Textile manufacturing in the north of England is a shadow of its former self, at least in employment terms. But the need to respond rapidly to demand, providing a wider, more varied output of goods, is leading to ‘reshoring’: manufacturers moving production back to the North, and outlets looking for local suppliers. That, in turn, is helping drive investment in 3D printing and other advanced manufacturing for clothing producers. Overall, one in six UK manufacturers report reshoring some jobs in recent years. And because it cuts down on transport, and because digital production generates efficiencies in the use of materials, the environmental costs can be sharply reduced.

The link in all this is digital technology. 3D printing, like other small-scale manufacture, relies on carefully-specified digital designs. On a bigger scale, the so-called ‘cyberphysical systems’ of high-end manufacture make intensive use of digital technologies, monitoring and responding to the production process in real-time. And at the very top end, digitisation of manufactured products means that producers can intensively monitor products in use. The volumes generated can be vast: Bombardier’s new airliner, for example, is expected to generate 844 terabytes of data on a single 12-hour flight — roughly equivalent to one-fifth of Facebook’s global use in a day. It’s this vast volume of data that makes smaller-scale, customised manufacturing viable, and means, increasingly, that manufacturers themselves look to make their money from after-sales service.

So the starting point for a successful industrial strategy has to be the provision of the digital infrastructure that can put all this to work today. Britain is a notorious laggard on infrastructure and, worse, reports show that the slowest broadband speeds are in the north of England, whilst the fastest, predictably, are in the South East. Some of Labour’s £250 billion National Transformation Programme can be put to good use rectifying this, particularly with superfast 5G technology almost upon us. Simply correcting the monumental imbalance in transport investment is a must. On figures from the Institute of Public Policy Research, the north of England receives £387 per person in transport funding, whilst London receives nearly three times that figure at £1,109 per person.

But once that investment is in place, the scope for new, smaller-scale production opens up. And because the scale of investment is small, worker and community ownership becomes a viable prospect. With backing from the National Investment Bank and the regional development banks, we can build a new economy of small, collectively-owned enterprises: from the supply and manufacture of micro generators, to the repurposing of our existing building stock. Already, Preston Council is experimenting with providing the funding needed to create a new generation of worker-owned firms. It’s the places that have been held back by neoliberalism, and successive waves of deindustrialisation, that have the potential to be the winners in the lighter, greener, digital economy.

The ‘Green Industrial Revolution’ called for by Shadow Business Secretary Rebecca Long-Bailey has to be a revolution from below. It needs the backbone of massive infrastructure investment, in public transport, large-scale energy generation, and digital infrastructure. It will need planning and organisation to hit what should be ambitious national targets for decarbonisation and reducing environmental damage. But from the Bronx to Barnsley, it can be real community and worker ownership that drives the revolution forwards. In the future we’ll have a slogan: small is socialist.