In Britain, employment in manufacturing peaked in 1966, when there were over 8m jobs in the sector. By 2009, this number had fallen to a little over 2.5m. So, every year for the last 43 years, an average of 130,000 manufacturing jobs have disappeared.

However, this picture is not quite all that it seems. First, manufacturing employment consists of all the people who work in companies whose main business is manufacturing goods. But many of these employees are not involved in making things—they may be caterers, accountants, lorry drivers and so on. Second, manufacturing output is a value-added measure. Roughly speaking it consists of the sales revenue of manufacturing companies minus the cost of all goods and services bought in by these firms from outside, such as raw materials, parts and various services.

These definitions have very important consequences. Suppose, for example, a manufacturer decides to invite an outside company