Britain’s manufacturers, once seen as the perennial laggards of the economy, are winning new converts from an unlikely source: the home front. Companies and consumers alike are turning back to British industry in record numbers, according to new research.

Industry experts say that years of decline have weeded out unproductive firms and left a lean and highly competitive sector that can hold its own with the mass producers of the Far East.

Domestic demand for British manufacturing is at its highest level for 18 years, the British Chambers of Commerce (BCC) reported yesterday, as it presented an unexpectedly upbeat summary of the health of the economy in the third quarter.

The BCC said that 36 per cent more manufacturers experienced a rise in domestic sales during the third quarter than a fall, equalling the record for the series, which began in 1989.

While in the 1960s it was consumers who were urged to support manufacturing with the “I’m Backing Britain” campaign, today the chief domestic driver of demand for manufacturing comes from heavy industry itself.

David Frost, director-general of the BCC, said that big players such as Rolls-Royce and Land Rover, flush with strong demand for exports, were in turn supporting small niche manufacturers in the UK.

A construction boom, fuelled by the soaring price of commercial property, was also encouraging firms to buy British. Strong retail sales and the high price of food was another factor, he said, helping companies that assembled food for supermarkets to enjoy robust growth.

Mr Frost said: “Because of this relentless focus on productivity by management, this core group of specialist companies have survived and flourished.”

One example of the resurgence of British industry is AESSEAL, a £100 million Rotherham-based company that makes mechanical seals for pipes in everything from waterworks and pharmaceutical factories to nuclear power stations.

The company has profited indirectly from the global food and commodity boom. Chris Rea, AESSEAL’s managing director, said that the past year had seen increased demand for his products from oil extractors in the North Sea and from factories making sweeteners and syrups.

While it has a small facility in China, AESSEAL still produces 95 per cent of its seals in Yorkshire. Mr Rea said: “It’s harder to get good management in China, it’s hard to protect your intellectual property, and productivity is low.”

He said that his business had dealt with relatively higher labour costs by automating its processes as much as possible and by concentrating on providing a comprehensive service for its business customers.

Lee Hopley, senior economist at EEF, the trade body for manufacturers, said: “British manufacturers are not competing on price any more, they are competing in niche markets on technology, design and service provision.”

She pointed out that Britons had bought 300,000 domestically produced cars and other vehicles during the past year.

The strength of the BCC survey added to speculation that any cut in interest rates following the credit squeeze will not come until next year. The figures showed that pricing pressures remain strong, particularly in manufacturing.

Empire lines

The idea of encouraging the British to buy their own produce has a long, if rather unsuccessful, history.

In 1968 Harold Wilson latched on to the slogan “I’m Backing Britain” as a way to encourage manufacturing, after the devaluation of sterling earlier that year.

The Prime Minister had been inspired by a campaign against laziness, sparked by five typists who decided to work unpaid overtime and who adopted the slogan.

The campaign also harked back to the 1920s and 1930s when posters produced by the Empire Marketing Board urged consumers to “Buy Empire Every Day”.

These days, a campaign group called British Made for Quality encourages clear labelling of domestic goods to discourage the purchase of foreign imports, which it says are often unsafe and of poor quality.

The move towards locally sourced food may be a sign that some consumers are paying attention.

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