This is now a very long thread and there are many interesting observations - here are mine
Re Evan Davies recent TV programme:The UK has indeed produced some marvellous machinery but is this relevant when the economy is really about ordinary people buying ordinary products at prices they can afford. The real issue is that engineering in the UK has long since become a forgotten profession with poor status and limited prospects.
Like engineeringtony I too worked at Rolls Royce on Olympus and Avon and their long forgotten rocket engines; and before that on aero engines made by Bristol Siddeley. I also worked in the car components industry and in agricultural engineering and did research at university leading to quieter vehicles. But I ended up in the computer industry and eventually became an independent management consultant after another stint at British Aerospace. Why? What was wrong with engineering?
The problem was that engineering was a poorly-paid profession - and in the early 1960's a dangerous one too. The far east sweat shops we see on TV now, were alive and well back then in Coventry, Birmingham, Bradford, Manchester - in fact everywhere where manufacturing was a major employer. Many factories of the early 1960's suffered from chronic underinvestment. Machinery was old, a good deal of it pre-war vintage. Working conditions and poor pay sowed discontent.
The term "engineer" was used to describe someone in a soiled blue boiler suit with dirty hands. It was not a description of a highly educated and respected professional. In Germany, in contrast, a fully qualified engineer was called "Doctor Engineer" and had a respected status above many other professions and was rewarded accordingly.
This was at the nub of the gradual decline of manufacturing in the UK. It was much easier to make money as an estate agent, car salesman, insurance man etc and you didn't need a degree. If you did have a degree you went into law, politics, media, accounting, banking - the service industry. There you could make a fortune, you wore a suit and had longer holidays.
I left the aerospace industry and went into central government at a time when the motor industry was dying. A dedicated division of the DTI was set up to manage British Leyland and find ways to keep it afloat. Another division looked after Chrysler. The division I joined looked after all the others and our job was to find ways to prop up failing companies with government (ie taxpayer's) money within the Selective Financial Assistance Rules laid down by Brussels. As it happened, I was the only engineer in the administrative hierarchy of this part of the DTI, most of the rest of the senior staff had humanities degrees. Engineering was not regarded in government as an ideal background for administrative office.
Jim Callaghan was very pleased when we found a way to help Ford build their factory at Bridgend. (The welsh coal mines were closing so we could give asistance and it was his constituency). We had to be more generous than the Spanish - who later got the Valencia Plant anyway - and the Dutch amongst others. Giving taxpayer's money away was an internationally competitive business. It seems it still is!
That was then; but giving taxpayer's money away to support engineering in the UK was and remains endemic in several branches of British Industry. The Nuclear Industry relies on it under the thin veil of green energy, yet its origins lie in the nuclear power needs of the military. Until cost-plus contracting was ended in the late 1980's, the defence industry in all its guises relied on it to provide an 8-13% profit margin on all development work it carried out. High-end engineering in electronics and aerospace was supported whilst the companies involved in it went offshore and sold their wares in exchange for oil or whatever else would suit the politics of the day. But when Brussles made competitive tendering more difficult to avoid swathes of the defence industry closed down. They were structurally uncompetitive. The Export Credit Guarantee Department was another government device to provide cheap contract insurance to the defence sector.
BAE Systems meanwhile had secured The Al-Yamamah arms for oil contract which was and remains the largest such contract and remains in operation today providing 600,000 barrels oil per day.
This type of engineering may be at the pinnacle of excellence but it carries a huge price. The products are so expensive they can only be purchased by governments and some of these are unpleasant. We can exchange aerospace defence products for oil but then we are locked into a dependency we cannot easily break. Where is the civil spinoff from these activities?
Evan Davies marvelled at the Maclaren car. But this too is a niche product for the few very rich. The F1 designers are a sideshow in GDP terms however top-end their engineering may be. This type of product does not relate to the application of engineering on a broad base to meet the needs of ordinary people any more than does the Typhoon strike fighter. The UK car industry is now dominated by offshore companies who are investing in a market that mainly assembles its products using our skilled labour.
In short, we have no broadly based engineering infrastructure that encourages new entrants into it and it would take a generation to build it even if we diverted money from the Eurofighter to pay for it. Much of this has been due to the attitudes of the political elite and the stupidity of government at all levels. The something for nothing society is now reaping its just reward because the service industry is just as vulnerable to the type of change we have seen in manufacturing over the last 50 years.
My question is what happens when the Euro Crisis blows up and the service economy strangles itself to death?.