... 179 references to 'energy', and well over 5,000 words.
Having now read the full Budget doc, it turns out the seemingly footling stuff on energy prices that dominated the headlines was far from the end of the story.
It starts with the predictable "not our fault, guv" - in some statistical detail - and, yes, there are the sticking-plaster give-aways the headlines were all about, which seem to characterise Burnham's style. But there is bigger stuff, too: "This Budget represents a shift in the government’s approach to energy". Since there's no space here to summarise the whole lot, it seems to mean two main things, the first of which had already started under the last Tory government: a gradual switch away from dumping all "policy costs" onto electricity and (to a lesser extent) gas bills, in favour of charging it to general taxation. There's to be more of that going on now.
Secondly, we have:
... this Budget kickstarts the long-term action required to get energy costs down for good:
- Controlling energy costs – no new policy costs will be put on bills until a comprehensive Cost Control Framework is in place at the spending review in 2027, which will set budgets for components of energy costs, including policy costs.
- Prioritising a cheaper energy mix and procuring new generation only where it lowers bills, benefits the system, and can be accommodated by the grid.
Now that could be really interesting. Of course, "lowering bills" can get very theological when the playing-field is fundamentally tilted by not attributing the costs of intermittency etc to the causes of that intermittency - but it's a very interesting line for them to be taking, and provides a stick with which to beat them when, e.g., the next batch of CfDs is to be awarded. No more floating offshore windfarms at £216.49/MWh: in fact, only solar farms could creep in under that definition, properly interpreted.
On top of this, it's becoming increasingly clear that the bloated DESNZ budget is being raided to fund all manner of things - small things this time round, of course, but when the Defence aspect of the putative 10-year Plan hoves into view, it is likely to hit DESNZ up for quite a few quid more, with correspondingly more bleating to come from the usual quarters. Finally, there is a bit on the energy aspects of data centres, for anyone interested.
And the aim of all this? "Cutting bills to reindustrialise the country." Sic! A laudable aim indeed.
Unfortunately, just when you think Miliband's fantasies have been consigned to where they belong, it's all spoiled by the assertion that "The focus now is to unleash cheap electricity". WTF? Where have you been hiding it all this while?!
ND
9 comments:
The doc on rebuilding six strategic industries which you linked to completely ignores the industrial ecosystem which is so vital. I linked to the disappearance of the UK bearings industry. Pretty sure almost everything uses them. We'll just be an assembler of imported parts...
Does Luxembourg need a bearings industry? Does Spain? Does Norway? Does Australia? Who is to decide which industries are essential, which trivial?
It would just be a feeble excuse for more bloody socialism.
That's fine if we're happy to be Luxembourg, Austria or Norway. But our rulers keep telling us what an awful threat Russia is while simultaneously moving what's left of our industry right next door.
And Russia's not 5% of the threat that China is. Oz and Nz are headed for Finlandisation at best, Vichy at worst. A pity as I have kids there.
BTW RHP, the last big Brit bearings factory due to close next year, was indeed a creation of 60s Labour technocrats. Japan's NSK took it over and will shortly shut it down.
"Who is to decide which industries are essential, which trivial?"
Dyson moved assembly to Malaysia when he realised that everything in his cleaners except the hoses came from the Far East.
"When our volume reached a certain level, the U.K. hose manufacturer did not want to make any more. He would have to have taken on more labor and a new factory, neither of which he was willing to do. I do not entirely blame him, as the risks he would run by committing to twenty-one-year factory leases and not being able to flex his labor force were too great."
Make stuff up, much?
Yes, I’ll say you do. Britain does in fact have a viable bearings industry https://grok.com/share/c2hhcmQtMg_e358f12c-c0e3-4c9c-8b68-c62808ced1b7
I highly recommend for the intellectually limited* who spout nonsense online to do themselves and the rest of us a big favour and get themselves an AI account. That way they can run their brain farts through a sanity check before inflicting them on the rest of us.
* Ironically, or perhaps not, I tend to observe those who are so afflicted are the most resistant to AI, for reasons I can only guess at. Perhaps a lifetime of “Huh! I don’t care about facts, I know what I think!” is to blame?
Being a thicko I tried the grok. As below it reveals that you have told us a partial and somewhat limited story.
As is normal in markets we get 4 or 5 big players and a run of also-rans or specialists. We've got the also-rans. Noble in their way but small.
To quote grok (without making an account)
Yes, but it is a modest, specialist-focused industry rather than a large-scale volume producer of commodity bearings.
The UK has an active bearings manufacturing sector, primarily oriented toward higher-value, precision, custom, aerospace, marine, and industrial applications rather than mass-market ball or roller bearings. Standard volume production faces strong competition from lower-cost producers in Asia (and some in continental Europe)
Yes, fair does, the UK does have a viable bearing industry - but small and aimed at the high end. This is vulnerable, sooner or later the high-end becomes vin ordinaire and any fool can do it anywhere.
This brings us right back to the UK's fundamental problem, it is very hard to keep up at the leading edge if you don't have a massive vin ordinaire business up behind to fund the lead. Not helped by the UK's elite being err a bit dim.
No, I presented the full, unabridged AI analysis in the link in my original comment. Did you not read it? It specifically referenced the UK’s (out of necessity) move to the high end side of manufacturing in this market.
Your subsequent musing about the difficulties of sustaining high-end manufacturing without the low end is all your own work, it is interesting you did not check this with AI first before unleashing it in us, because if you had, you would have discovered it is almost entirely unsupported by any economist or any industry expert (both for bearings and also for wider manufacturing in a high skill, high-end biased and so high cost economy such as the UK’s).
Here is the complete picture https://grok.com/share/c2hhcmQtMg_66fcf3fe-ebf8-4833-a06e-5ff992354492 so perhaps this time it might be worth reading it and studying it to acquaint yourself with a thorough and accurate understanding of the matter.
"Standard volume production faces strong competition from lower-cost producers in Asia (and some in continental Europe)"
A quick search for ten largest bearing manufacturers gives 4 Japanese companies, 2 Chinese, 2 USA, German and Swedish. OK, are Japan/USA/Germany/Sweden low-cost economies?
It was to prevent the Swedes (SKF) eating our bearing manufacturing that a 1960s Labour government merged Ransomes Hoffmann and Pollard. Now Japan have eaten it.
Your response confuses headquarters (or brand origin) with production location, cost structure, market segment, and volume vs. revenue. It is a weak rebuttal that equates “largest by company revenue or brand recognition” with overall industry economics or proof that high-wage economies dominate the relevant part of the market.
1. HQ country is not the same as where the bearings are made or at what cost.
SKF (Sweden), NSK/NTN/JTEKT (Japan), Timken (US), and Schaeffler (Germany) all have extensive manufacturing footprints in lower-cost locations (China, India, Mexico, Thailand, Indonesia, Eastern Europe, etc.). SKF has large plants in China (e.g., Dalian, Xinchang) and India and has shifted production for regionalization; Japanese majors have multiple plants in China and elsewhere in Asia. A Swedish or Japanese headquarters does not mean the product is made primarily with Swedish or Japanese labor costs. Global firms deliberately locate volume production where it is competitive.
2. Revenue rankings favor higher-margin products; they do not equal volume or overall production dominance.
Lists of the “largest bearing manufacturers” (typically SKF, Schaeffler, NSK, NTN, JTEKT, Timken, MinebeaMitsumi, etc.) rank by revenue or branded premium share. China is frequently cited as the largest producer by unit volume (various sources put Chinese production at a very large share of global units, with Chinese makers collectively holding roughly a quarter of the market in some estimates). Chinese firms (C&U, ZWZ, LYC and others) are often stronger in standard/commodity and mid/low-end segments, where unit volume is high and margins lower. Revenue lists therefore understate low-cost production capacity and overstate the dominance of high-wage-country brands in the broader industry.
3. The industry is segmented; “largest companies” are mostly the high/mid-high end players.
The classic “Big 8” (or similar) from Sweden, Germany, Japan, and the US have long held the majority of the higher-precision, higher-reliability, specialty, aerospace, and higher-value segments. Chinese makers have historically concentrated in volume mid/low-end and standard industrial/automotive bearings and are moving up. Pointing to the HQ of the revenue leaders does not refute claims about low-cost volume production, cost competition in standard products, or capability growth in China. It treats the market as monolithic.
4. You answered a different question than you appeared to address.
The rhetorical “are Japan/USA/Germany/Sweden low-cost economies?” only works if the original analysis claimed that only low-cost economies can produce large bearing companies or that high-wage countries cannot succeed in the industry. High-income economies built these industries historically through technology, process control, quality systems, R&D, and scale; they continue to succeed by focusing on higher-value products and by offshoring or regionalizing volume production. That does not disprove cost advantages in lower-wage locations for many product types, nor does company HQ prove that labor-cost differentials are irrelevant.
5. List composition and what “largest” means are flexible. Exact top-10 counts vary by metric (pure-play bearing revenue, group revenue, units, capacity) and by year. Chinese companies appear in some broader or volume-oriented lists; they are often lower or omitted in pure revenue rankings of the premium tier. Treating any one “quick search” list as decisive, then jumping to a national-cost conclusion, is sloppy.
Post a Comment