Rethink: manufacturing or services?

Is the UK destined to be an economy that only provides services and no longer makes things? Whether you agree or not, it's a narrative that's stuck with the UK for decades.

There are now far fewer large homegrown manufacturing firms than there were 60 years ago, which contribute far less as a percentage of national income. In the 1960s, a third of the UK workforce was employed in manufacturing, but now that's down to less than 10 percent.

But not all of those workers in the 1960s were on the production line; many were in-house cleaners, cooks, drivers and accountants. Those roles were contracted out decades ago, and are now counted as service jobs.

So there's always been a blurring between these two parts of the economy, and now, increasingly, companies are finding ways to hold on to customers by adding value, from car mechanics offering a free courtesy vehicle, to the company that makes laser printers telling you when the ink is running low in your machine.

This called servitization, and because of advanced data analysis, manufacturers are even able to provide an outcome, rather than just a product.

It's the difference between selling jet engines and instead providing guaranteed thrust for airliners.
Or the difference between selling a gas boiler and instead guaranteeing a warm home when a customer needs it.

It's a business strategy that has risks, but it can make a customer's life easier, and it can lead to higher profits, less waste and greater productivity. But despite its benefits, the value of servitization to the UK economy isn't being measured. So is it time to rethink the relationship between manufacturing and services?

Presenter: Ben Ansell
Producers: Ravi Naik and Tom Gillett
Editor: Damon Rose