Industrial Advantage - and Jobs

There is a stubborn myth that refuses to die in discussions about manufacturing. That labour costs are the decisive factor. That if only wages were lower, everything would be fine. This argument survives mainly because it is easy to repeat and flatters people who stopped updating their mental model sometime around the collapse of the fax machine.

Labour mattered when factories were full of people rather than robots. That world has gone. Modern manufacturing is capital-intensive, automated, software-driven and relentlessly optimised. Labour still matters, but it is no longer the main event. In many sectors it is a footnote. Once you automate properly, the cost structure shifts and something else moves to the top of the list very quickly.

Energy.

Not as an abstract concern, but as a brutal line item. Electricity and heat underpin almost everything that actually makes money at scale. Steel, aluminium, cement, chemicals, semiconductors, batteries, hydrogen, data centres, AI. These processes do not care about minimum wages or national pride. They care about reliable power, available in vast quantities, at a predictable price over decades.

This is where the West has tied itself in intellectual knots. We spent years pretending that imported fossil fuels meant cheap energy. They never did. They meant volatile energy, priced by geopolitics, wars, cartels and the mood swings of regimes we do not control. Fossil fuels only looked cheap because their real costs were kicked down the road or dumped on someone else.

Renewables turn that logic inside out. High capital cost up front, then electricity that is almost free at the margin for decades. No fuel risk. No tankers. No sudden price spikes when someone invades a neighbour. For energy-intensive industry, that stability is not a nice extra. It is decisive.

China understands this perfectly, which is why its dash into renewables has nothing to do with environmental virtue. It is industrial strategy, executed at scale and without apology. Build obscene amounts of generation. Reinforce the grid. Add storage. Drive down the long-run cost of power and remove exposure to imported fuel shocks. Then watch the factories follow.

Automation does the rest. Once labour is 10 or 15 percent of total cost rather than 40 or 50, wage differentials stop mattering very much. Power prices, uptime and planning certainty matter enormously. Aluminium smelters follow electricity. Battery plants follow electricity. Data centres follow electricity. Everything follows electricity.

Britain, meanwhile, has chosen a different path. We talk about net zero as if it were an optional lifestyle preference rather than the foundation of future competitiveness. We block onshore wind, delay grid upgrades, and obsess over the short-term politics of bills, then act surprised when industry quietly goes elsewhere. This is not caution. It is self-harm dressed up as pragmatism.

Energy policy is industrial policy. It always has been. Coal powered the first industrial revolution. Oil powered the second. Cheap, abundant electricity will power the next one. Countries that grasp this will manufacture the future. Countries that do not will import it, run permanent trade deficits, and soothe themselves with rhetoric about services, flexibility and sovereignty.

China is not rushing into renewables. It is locking in advantage. The rest of us are still arguing about pylons while the factories decide where to build.

Factories do not care about culture wars. They care about power prices. And on that front, the arithmetic is already doing the talking.