The truck maker has contributed to startling growth in production efficiency across one part of the north-west

With the whirring shriek of a factory siren, the afternoon break at Leyland Trucks comes to an abrupt end on an unusually hot spring day in Lancashire.

Once part of the sprawling British Leyland automotive empire that epitomised Britain’s industrial decline in the 1970s – a model of corporate failure, disrupted by strikes and uncompetitive on the world stage – the old truck division in the town of the same name, a handful of miles from Preston, now contributes to the strongest growth in economic efficiency in the country.

In this part of mid-Lancashire, encompassing Preston and the wider Ribble valley, productivity growth increased most out of 168 regions of the UK between 2010 and 2017, according to the Office for National Statistics, bucking a national trend for dismal efficiency gains.

“Lancashire is the birthplace of the industrial revolution. Do the roots go back that far? Who knows?” said Peter Jukes, operations director at Leyland Trucks, who has worked there for 42 years, reflecting on why mid-Lancashire might have made gains so elusive for the country at large. “Perhaps it’s the long-term heritage in the north-west for industry in general.”

Britain has a problem with improving productivity. Economists are perplexed, not least at the Bank of England and the Treasury. Perhaps this corner of the north-west, once symbolic of Britain’s industrial nadir, has some answers.

Brennan Gourdie, managing director of the company, who recently moved to Leyland Trucks from its US parent company, Paccar, walks with Jukes around the factory, where more than 1,200 workers assemble about 18,000 trucks a year.

“As for all companies, productivity is very important to us. We set goals each year for improvements, which will contribute to the bottom line,” he said.

Paccar has invested about £100m in the site since the late 1990s, when the US firm bought Leyland and the Dutch company Daf – the latter brand being the one used today for its trucks in both the UK and Europe, immediately recognisable on Britain’s roads hauling Eddie Stobart trailers and Royal Mail deliveries. More than a quarter of the trucks bought nationwide each year are built here.

Facebook Twitter Pinterest Liz Russell of EnviroSystems: ‘With this business, we need to be very productive.’ Photograph: Christopher Thomond/The Guardian

While the productivity gains in mid-Lancashire have been strong, they come from a low base: levels here are still only 2% above the UK average. London and the south-east remain streets ahead.

One reason behind the gains is likely to be the region’s industrial strength. Once the heartland of the industrial revolution, and despite decline since the 1970s, manufacturing still accounts for about a quarter of mid-Lancashire’s economic output, versus roughly a tenth for the country as a whole.

Some economists argue industry is better at doing more with less, compared with the service sector, where more low-skilled jobs have been created over the past decade.

Lancashire’s workers have increased the amount of hours they put in by 1.5% since 2010, but economic output has risen much faster, by 14% according to the ONS. Output rose faster in London – by 33% in the west of the capital – but required a 25% rise in hours worked.

Leyland is part of a wider patchwork of firms helping to boost mid-Lancashire’s productivity. BAE Systems has its biggest concentration of staff in the area, about 10,000, and builds the F-35 and Typhoon jets at sites at Warton and Samlesbury, using its regional base to test them over the Irish Sea.

Small companies are also driving up their efficiency gains. EnviroSystems, a family-owned company near Preston that makes cattle bedding out of recycled paper, has had help from Be the Business, a government-backed campaign to raise small firms’ efficiency. Economists believe Britain has a “long tail” of less productive firms, and helping them improve is the key to driving up efficiency gains for the country at large.

Liz Russell, the founder of EnviroSystems, worked with Siemens on the scheme to raise her firm’s productivity. “It gave me a lot of confidence. With this business we need to be very productive – I have a passion for that,” she said.

At the Leyland factory, output over the past decade has doubled. The snaking production line has been digitally mapped, from the bolts screwed to chassis using computer-programmed precision to four robotic arms spraying paint. Truck output per employee has gone up about 23% over the past five years.

The turnaround is, however, a success story that almost never was. In the troubled history of Leyland, the early 1990s saw it almost collapse. But help from Lancashire county council for a management buyout kept the truck division going.

“It consumed a huge amount of public money, this company. There’s no denying that, but we weren’t buying into rust-belt,” said David Taylor, who helped the county fund the rescue and now chairs the Lancashire Enterprise Partnership.

“It could not have been higher-risk. But the counterbalance to that is – it’s as true today as it was 25 years ago – we’re good at making things. There’s a manufacturing tradition in the county of Lancashire.”

Facebook Twitter Pinterest Brennan Gourdie, managing director of Leyland Trucks: ‘We set goals each year for improvements.’ Photograph: Christopher Thomond/The Guardian

The enigma of greater efficiency

What is productivity?

Productivity measures the efficiency of an economy by dividing the value of output generated by the inputs employed. The efficiency of the UK workforce is calculated as output per worker, output per job and output per hour.

Why does it matter?

Academics believe productivity gains are vital for improving living standards over the long term. When an economy can create more wealth with fewer resources, the spoils can help pay workers higher wages.

Why is the UK’s performance so mediocre?

The creation of low-skilled jobs since the 2008 financial crisis is thought to be among the reasons. When employment rises but output barely increases, productivity has stalled. Some analysts believe a lack of business investment and a decade of austerity have also had an impact.

What can be done?

Greater investment in new technologies and training workers in new skills could help reboot productivity growth. Aiming to help support firms to do this, the government has made fixing productivity growth a key priority with its industrial strategy. Brexit, however, could make companies reluctant to invest at a time of political uncertainty, paving the way for weaker growth in future.