For anyone remotely interested in the welfare of our manufacturing base there's a serious glimmer of silver lining to this week's merry japes in Washington. Whatever the outcome it will, if you think about it – and I can't wipe the smile off my face – be oh so long before the City Slickers are taken seriously again.
Thanks to them, of course, manufacturers face deep problems. Despite the odd, and temporary, lull in the oil price, costs are going through the roof. Thanks to the money-men's conjuring of a bubble of house-price based demand, its popping has sent real demand through the floor.
Some car sales have fallen by two-thirds, with huge knock-on supply-chain effects in the UK's West Midlands, still the country's industrial heartland: Land Rover at Solihull is cutting its night shift from October and putting some assembly lines on a four-day week; Toyota at Burnaston, Derby, has cut a shift on its Auris/Corolla hatchback line.
Elsewhere, construction and consumer electronics are taking a battering, says UK Engineering Employers' Federation senior economist Lee Hopley. Overall, the UK manufacturing sector's August figures showed the fifth month of contraction in a row. Add in that for some time, if you believe the headlines, borrowing for investment will be either next to impossible or too expensive.
But however reluctant the banks are to trust each other for a loan, they haven't quite closed their doors to the rest of us, or so a senior Barclays exec told me last week. "We're very much open for business," he said, though investment capital might cost you a bit more than it used to.
Indeed, it could be a lot worse. To start with, money isn't likely to cost anything like as much as when the Bank of England base rate hit 15%, and stayed there, in 1989-90. Note too that manufacturing everywhere, including the UK, is leaner and more efficient than ever – because it's learnt to self-reliant. The UK industrial sector, for example, is smaller but, since the 2001-02 recession, more resilient, says Hopley. It has fought off an uncompetitive exchange rate, poor productivity growth and the emergence of competition from low cost economies (LCEs).
The sliding pound the slickers have bequeathed UK industry may not be good news for foreign-sourced materials prices but it's great for exports. "There are opportunities to be had out there," Hopley says. "Some parts of the global economy are still growing." Even at home, UK business-to-business customers have learnt the hard way that sourcing from local manufacturers offers huge advantages over the deceptively-cheap offshore option.
Hopley adds that companies which are innovating, "adding value through service provision and those serving niche markets," are likely to be less affected by economic conditions than others. The credit crunch itself – strictly a technical issue about inter-bank lending – doesn't hit too hard a business that has financed investment internally. And Hopley points out that most manufacturing businesses are surviving pretty well because they finance investment from profits.
Our man at Barclays, UK head of manufacturing Ray O'Donoghue, says manufacturers are more used than others to handling changing circumstances. They have been quick to develop new markets, and treated the challenge from the low cost economies as an opportunity rather than a threat. Now, he adds, weaknesses in sterling against the euro and the dollar are helping them. "A lot of manufacturers have taken the right actions a lot earlier than most," says O'Donoghue. "They've looked at their budgets, their forecasts, and adjusted their cost bases accordingly."
Euro-zone economies, meanwhile, though affected by all this turmoil, have front row seats for the bout and can thank their stars they were wise enough not to put on the credit-bubble gloves. Even for them, as for all of us, however, the world economy now enters unknown territory. The entertainment laid on by Congress and Wall Street throughout the last week wasn't just knockabout fun.
Remember that this catastrophe – and that's what, for many people, it is – has happened, we're told, because Wall Street went out of control. Consider, then, an assertion earlier this month by New York Times writer Patrick McGeehan that New York was in danger of losing its financial pre-eminence. To London.
The reason? Wall Street's tighter regulation – yes, tighter – had made it less attractive to investors than the City of London.
Time, methinks, for Brits to batten down the hatches.
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