Gary Howells explores what a practical industrial strategy might look like for stronger productivity, better jobs and greater economic resilience
Welsh manufacturing does not need another broad statement of ambition. It needs a disciplined national programme that turns existing policy into investment, production, exports and skilled work.
Wales begins from a stronger industrial base than is sometimes recognised. Manufacturing supports about 150,000 jobs and accounts for about 16 per cent of Welsh economic output, a much larger share than across the United Kingdom as a whole. That matters because manufacturing creates productive jobs, sustains supply chains and brings income into Wales through exports.
The Welsh Government deserves credit for recognising this opportunity. A Manufacturing Future for Wales, Wales Innovates, the Wales Procurement Policy Statement and the work of the Development Bank of Wales provide many of the right components. The central challenge is no longer whether Wales has policies. It is whether those policies can be joined together, managed with urgency, and measured against clear national outcomes.
Syniadau uchelgeisiol, awdurdodol a mentrus.
Ymunwch â ni i gyfrannu at wneud Cymru gwell.
The foundations are already in place
A Manufacturing Future for Wales identifies six priorities: industrial decarbonisation, anchoring important companies in Wales, developing workforce skills, responding to technological change, advancing fair work and coordinating business support. These are sensible priorities. They recognise that industrial policy is not simply about grants to individual companies. It requires skills, finance, energy, infrastructure, innovation and effective management to work together.
Wales should concentrate resources where it has established capability, defensible advantages and credible markets.
Wales Innovates adds a broader mission that connects research, public services, skills and commercial application. The Wales Procurement Policy Statement also commits the public sector to social, economic and environmental value, including more resilient local supply chains. The Development Bank of Wales provides loans and equity and describes itself as a patient and catalytic investor.
The Government has also set an ambition to halve the productivity gap between Wales and the rest of the United Kingdom within ten years. That is welcome. Productivity is the essential measure because higher output per hour creates room for better wages, stronger businesses and more sustainable public finances.
Taken together, these policies amount to a credible starting point. What remains missing is a single delivery framework with measurable industrial targets, named leadership and a clear account of who is responsible when progress falls short.
From policy to delivery
I believe that Wales should establish a National Industrial Delivery Council, chaired at senior ministerial level. It should include manufacturing businesses, trade unions, universities, colleges, local authorities, the Development Bank of Wales and representatives of the United Kingdom Government, where reserved powers are involved.
Its purpose would be practical. It should agree priorities, remove obstacles and publish a short annual scorecard. It should also identify where decisions on planning, grid connections, skills, finance or procurement are delaying investment.
This would not require another large bureaucracy. It would require a small, capable delivery team with the authority to bring departments and institutions together. Wales needs programme management as much as it needs policy design.
Choose sectors where Wales can win
A serious strategy cannot support every sector equally. Wales should concentrate resources where it has established capability, defensible advantages and credible markets.
These sectors connect Welsh natural resources and industrial knowledge with markets likely to grow over the coming decade.
Compound semiconductors are an obvious priority. South Wales has a recognised cluster combining research, design and manufacturing. UK Research and Innovation reports that the cluster contributes about £436 million to the economy and supports more than 3,000 jobs. The opportunity is to retain more intellectual property, attract later stage manufacturing and build Welsh suppliers around the cluster.
Aerospace and advanced engineering should remain central, particularly around Broughton, Deeside and existing supply chains. The objective should be to protect core capability while helping smaller firms adopt automation, digital production and lower carbon processes.
Other priorities should include renewable energy equipment, grid technology, batteries and energy storage, medical technology, food manufacturing, timber products and modern methods of construction. These sectors connect Welsh natural resources and industrial knowledge with markets likely to grow over the coming decade.
Steel also requires a long term strategy. Wales may not control international prices or United Kingdom trade policy, but it can support lower carbon production, specialist steels, recycling and greater use of domestically produced steel in public projects where procurement law permits.
Targets for 2036
The following targets are recommendations, not forecasts. They should be tested against a verified 2026 baseline and adjusted where the evidence requires. Their value is to define the scale of ambition and make delivery measurable.
- Increase real manufacturing output by 30 per cent.
- Increase manufacturing productivity per hour by 25 per cent.
- Double annual private manufacturing investment in real terms.
- Create 20,000 additional skilled manufacturing and industrial jobs.
- Retrain 40,000 people in technical, digital and production skills.
- Raise Welsh business participation in selected strategic supply chains by 15 percentage points.
- Increase manufactured goods exports by 40 per cent after inflation.
- Reduce emissions per unit of manufacturing output by 50 per cent.
These targets should not encourage subsidy for its own sake. Public support should be conditional on additional investment, workforce development, productivity improvement, responsible employment and measurable value retained in Wales.
Gofod i drafod, dadlau, ac ymchwilio.
Cefnogwch brif felin drafod annibynnol Cymru.
Finance that improves businesses
The Development Bank of Wales is the natural foundation for a stronger industrial investment function. Its 2026 to 2027 operational plan includes support for Welsh ownership, business succession, agricultural productivity and sustainable industry, with a headline target of £143.8 million of investment through more than 550 transactions.
The next step should be a dedicated industrial transformation fund within the Bank. It should provide patient loans, equity and guarantees for automation, factory expansion, energy efficiency, research commercialisation and management development.
Access to larger investments should depend on a credible improvement plan. Businesses seeking public finance should demonstrate sound governance, capable management, workforce training, clear productivity measures and realistic export or supply chain opportunities. This would borrow the best principle from German business banking: finance should be linked to the long term development of the company, not merely to the availability of collateral.
Management capability deserves particular attention. Capital without capable leadership can preserve weak performance. The fund should therefore finance experienced operational advisers, leadership training and stronger financial controls alongside machinery and buildings.
Sites, energy and skills
Industrial investment needs places where companies can expand. Wales should identify a limited number of priority employment sites and make them genuinely investment ready. That means planning certainty, adequate power, digital connectivity, transport access and suitable premises.
Compassionate economic policy still requires discipline because money wasted on ineffective support cannot be spent on health, education or successful investment.
Grid capacity is increasingly decisive. The industrial plan should therefore include a published map of energy constraints and a timetable for resolving them. Where full grid reinforcement will take years, local generation, storage and private wire arrangements should be considered where technically and legally possible.
Skills planning must be linked directly to investment projects. Further education colleges should receive multiyear commissioning agreements for priority technical skills. Employers should help design courses and provide equipment, placements and instructors. Universities should be rewarded not only for research quality but also for commercialisation, local supplier development and graduate retention.
Use public purchasing strategically
Welsh public bodies spend substantial sums on construction, health, transport, energy and public services. Procurement cannot lawfully guarantee contracts to Welsh companies simply because they are Welsh. It can, however, place greater weight on resilience, carbon, training, innovation, social value and the security of supply where these requirements are relevant and applied fairly.
The Welsh Government has already moved in this direction. Its policy note on sourcing steel in construction and infrastructure provides practical guidance for public projects. Similar sector specific approaches could support timber, food, medical supplies, low carbon construction and energy equipment.
The aim should be to give Welsh firms clear advance information about future demand and time to qualify for contracts. Procurement should create a market signal, not an entitlement.
Measure what matters
The industrial scorecard should report output, productivity, private investment, exports, wages, technical training, emissions and Welsh participation in strategic supply chains. Results should be published by sector and region where reliable data permit.
The opportunity is to build a modern manufacturing economy that combines advanced technology with skilled people, patient capital and responsible employment.
Government should also publish the value of support approved, private investment secured and the results achieved after three, five and ten years. Where evidence is incomplete, the Government should say so plainly and commission the data needed. False precision would be worse than an acknowledged gap.
Independent evaluation is essential. Programmes that work should grow. Those that do not should be changed or closed. Compassionate economic policy still requires discipline because money wasted on ineffective support cannot be spent on health, education or successful investment.
A practical Welsh ambition
Wales should not try to recreate the industrial economy of the past. Nor should it accept an economy dominated by low productivity, insecure work and dependence on decisions made elsewhere.
The opportunity is to build a modern manufacturing economy that combines advanced technology with skilled people, patient capital and responsible employment. Artificial intelligence, robotics and open source technologies can help smaller Welsh firms improve design, maintenance, quality control and administration. Their value will depend on adoption, skills and ownership, not on technology alone.
The Welsh Government has already done important work. It has identified the right themes, created useful institutions and recognised the productivity challenge. The next phase must be more focused: fewer priorities, stronger management, conditional finance, faster infrastructure and public reporting against clear targets.
Making more in Wales is not nostalgia. It is a route to resilience, dignity at work and a broader tax base. With consistent leadership over a decade, Wales can retain more value from its talent, resources and ideas. The foundations exist. The task now is delivery.
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