How other countries built the industries Britain let go.

How has Denmark prospered from one big industrial bet? How did South Korea build an industrial economy that excels in everything from shipbuilding to cutting-edge batteries? Why did Japan keep its heavy industries when everyone else let theirs go?

Each made deliberate choices. Each sustained them across decades and changes of government. Each underpinned them with competitive energy. And each now has options that countries without industrial depth simply do not have.

Britain has done the opposite. Four industrial strategies launched and abandoned since the early 2000s. The highest industrial electricity prices in the developed world. A manufacturing share of GDP that has halved in a generation.

In this episode, I look at what the countries that built lasting industrial strength actually did, what happened when the United States tried to do it at speed and then reversed course, and what Britain can learn whilst it has the chance.

Transcript

Why Britain Keeps Losing Industry

SPEAKER_00 0:04

Welcome back to How We Build Britain, a podcast about energy, infrastructure, and industry. I'm Rob Gilbert. If you find this podcast useful, please subscribe wherever you listen to your podcasts. In the last episode, I told you about my first job in the textile industry. What I didn't tell you was what happened next. The company I worked for was bought by a Tochu Corporation, one of Japan's largest trading houses. While Britain was offshoring its textile manufacturing and treating those capabilities as yesterday's industry, a Japanese conglomerate looked at the same assets and saw value worth acquiring. That tells you something important about the difference between how Britain thinks about industrial capability and how other countries think about it. We were dismantling, they were buying. This episode is about the countries that got the calculation right, the ones that chose to build industrial strength deliberately, that committed to specific sectors and held the line for decades. Because the record is clear, the countries that made those choices are the ones with options today. The countries that didn't are paying the price. That matters more now than it ever has. American tariffs are rewriting trade relationships, Chinese state-backed companies are reshaping entire sectors, and Europe is now building its own industrial protections. In that world, industrial depth is not a nice to have. Britain is one of those countries. As I set out in episode one, Britain's manufacturing share of GDP has fallen from 14% in 2000 to under 9% today. Our share of global manufacturing exports has halved in two decades. We've launched and abandoned four industrial strategies since the early 2000s. The pattern is clear. The question is how to break it. So what did the countries who kept their industries actually do? What separates them from us? And importantly, what can we learn? Not as an academic exercise, but as lessons that we can put into practice to maximize the industrial value of the energy transition. I've chosen three countries that each illustrate something specific and different. Denmark made one bet. South Korea built depth from almost nothing, and Japan kept what it had when everyone else was letting it go.

Denmark’s Long Bet On Wind

SPEAKER_00 2:37

So let's start with Denmark and go back in time. In 1973, Denmark imported 99% of its energy. The oil crisis hit them harder than almost any country in Europe. Their response was to build an industry around a single technology, and to sustain that bet for more than half a century. Denmark chose wind. It funded research, created stable procurement, built test infrastructure, and held the commitment through multiple changes of government. The result is that a country of 5.9 million people is home to Vestus and Orsted, two of the most significant energy companies on the planet. Today, nearly 60% of Denmark's electricity comes from wind, up from almost zero when it started. Green energy and services now account for 11% of all Danish exports. The wind industry alone employs more than 33,000 people, roughly 2% of the entire private sector workforce. And here is the detail that matters most right now. The IMF's April forecast confirmed that Britain will be the hardest-hit G7 economy by the current Iranian energy crisis. Denmark, having spent decades building domestic energy resilience, enters this kind of shock from a much stronger position. A country that was nearly destroyed by energy dependency in 1973 made a choice, stuck with it, and half a century later that choice is paying a dividend in both industrial strength and energy security. Denmark's lesson is straightforward. Choose one thing and commit for long enough that capability compounds. But that also means choosing what not to do. Denmark didn't try and build a solar manufacturing industry. It didn't spread limited public capital across every emerging energy technology. It chose wind and it let other things go. That is the part Britain has always found hardest. Our instinct is to keep every option open, fund a bit of everything, and avoid the political difficulty of saying this sector matters more than that one. Denmark shows that concentration is not a weakness, it is a mechanism.

South Korea’s Cheap Power Advantage

SPEAKER_00 4:54

But what if you are starting with almost nothing? South Korea in 1970 had a GDP per capita of roughly $280. Today it is over $36,000. Total exports hit a record $710 billion last year. The South Korean government directed capital into shipbuilding, steel, and heavy industry. And within a generation, the country had become the world's largest shipbuilder and one of the largest steel producers. That industrial base then became the platform for semiconductors, batteries, and advanced manufacturing. Each generation of industry created the foundation for the next. LG and Samsung didn't pivot into batteries from nowhere. They pivoted from deep industrial foundations that the government had spent decades deliberately supporting them in building. But here is the detail that matters for Britain. Underpinning all of it was a deliberate choice about energy. South Korea built cheap baseload power, coal and nuclear, together, as an explicit tool of industrial competitiveness. Industrial electricity in South Korea costs roughly 10 pence per kilowatt hour, according to IEA statistics. In Britain, it costs 26 pence. British manufacturers pay nearly three times what their South Korean competitors pay for the same input. You can't build competitive industry on the most expensive electricity in the developed world. South Korea's lesson is that industrial debt is cumulative, but it needs a foundation, and that foundation is cheap energy.

Japan Keeps Heavy Industry Alive

SPEAKER_00 6:36

Denmark and South Korea built new industries from deliberate bets. Japan did something different, and I think it's the most instructive example for Britain. It kept what it already had. The post-war reconstruction story is well known, but the speed of it is still striking. In 1945, Japan's industrial base was devastated. By 1970, it was the second largest economy in the world. That was coordinated through what became METI, Japan's Trade and Industry Ministry, with deliberate strategies in steel, shipbuilding, automotive, and electronics sustained over decades. Not a market outcome, an institutional one. But the modern story is what Britain needs to pay attention to. Japan is one of the very few advanced economies that chose to retain its heavy industrial base when the prevailing wisdom said, this is yesterday's economy. It still produced 84 million tons of steel in 2024. It still has deep capability in chemicals, advanced materials, and precision engineering. Industries that Britain, France, and much of the West have allowed to shrink or have offshored, Japan has deliberately kept. That looked expensive for a while. Retaining domestic steel production when Chinese imports were cheaper, maintaining chemical manufacturing when margins were thin. The conventional economic argument said let it go, import it, focus on services. The conventional argument was wrong. Japan's ability to move into advanced batteries, power electronics, and next generation nuclear is not despite its retained industrial base. It is because of it. The advanced industries sit on top of the foundational ones. Materials, chemicals, precision engineering. Japan has them. Many of its competitors have let them go. And as supply chains are weaponized and trade barriers go up, Japan's industrial depth gives it resilience that countries without it simply do not have. It can adapt because it has something to adapt from. Japan's lesson is therefore perhaps the most important for Britain. Don't let go of what you already have. Retained capability is the foundation on which everything else gets built. So three countries, three lessons. Denmark, choose one thing, commit and be willing to let other things go. South Korea, build depth and underpin it with cheap energy. Japan, keep what you have, because once it's gone, your options go with it.

Speed Depends On Policy Stability

SPEAKER_00 9:20

Now I can hear the objection. These are all compelling stories, but they're stories rooted in the 1970s and 1980s. Britain does not have 50 years to correct its industrial decline. We need results on a very different timescale. And that objection is fair. And the answer is that speed is possible. We know it's possible because we've seen it happen even in the past few years. And we've also seen what happens when a country changes course. The United States passed the Inflation Reduction Act in August 2022. Within two years, it had triggered $135 billion in private clean energy investment. Battery factories, solar plants, EV assembly lines, built or under construction across dozens of states. That's not a 50-year story. That is what happens when a country deploys serious policy firepower to back domestic manufacturing at speed. And then the United States changed course. When the new administration took office in early 2025, IRA funding was frozen. The objection was ideological, an instinctive opposition to state intervention in markets that will sound familiar to anyone who has followed British industrial policy debates. Over the course of last year, $34.8 billion in clean energy projects were cancelled, closed or downsized. 38,000 jobs erased. Cancellations outpaced new investment 3 to 1. Battery factories shelved, EV production lines converted back to combustion engines. And the majority of cancelled investments were in the congressional districts of the party that reversed the policy. That is not an abstract lesson about policy consistency. It is recent, concrete evidence of what happens when industrial strategy is treated as something the next government can undo. Capital doesn't wait for political cycles to resolve themselves. Once it moves, it doesn't come back easily. And it is the pattern Britain has repeated with four abandoned industrial strategies in two decades. Not because any of them were wrong, but because none of them lasted long enough to find out if they were right.

China Proves Scale Can Move Fast

SPEAKER_00 11:45

And if we want to talk about speed and commitment, we have to talk about China. Whatever your view of the means, the results are not in dispute. China went from negligible presence in solar manufacturing to 80% of global capacity in roughly 15 years. It dominates batteries and electric vehicles, it's rapidly moving into advanced robotics and AI. Each is the product of massive, sustained and state-directed industrial strategy. And the speed of China's progress has reshaped the competitive landscape for every other industrialised economy on the planet. The point is not to copy either approach. The IRA deployed fiscal firepower on a scale the UK Treasury would find difficult. China's model relies on state direction of capital, markets, and labour on a scale that no democracy could replicate. But both prove that speed is possible when the commitment is serious. And the American example now also shows what happens when that commitment breaks.

What Britain Must Change Now

SPEAKER_00 12:50

So what does all of this mean for us? Every country I have described built or retained industrial strength through the same combination. Clear choices, sustained overtime, competitive energy to underpin those industries, institutions that held the course beyond electrical cycles, and capital that operated on industrial timescales rather than political ones. Britain has the opposite of each. We spread resources across too many priorities to make a difference in any of them. We have the highest industrial electricity prices in the developed world. We restart our industrial strategy every time the government changes. And we expect private capital operating on quarterly return cycles to make investments that take decades to pay off. None of that is inevitable. Every one of those conditions is a choice that can be changed. The energy transition gives us the demand signal, and the changing nature of global politics and trade give us the imperative. We just choose to change our institutional architecture to match the moment. The world we are entering is one where supply chains are contested, where trade relationships are conditional, and where countries without domestic industrial depth are exposed. I mentioned the IMF's April forecast earlier. Britain's growth cut to 0.8%, the largest downgrade in the G7. Denmark, which made its choice 50 years ago, enters the same crisis from a position of strength. That is the difference between a country that built industrial resilience and one that assumed it could always buy what it needed. From my own experience, Itochi bought a British textile business because it saw industrial value that we had decided was no longer worth keeping. That pattern has repeated itself across sector after sector for 40 years.

Next Time: Foundational Industries At Risk

SPEAKER_00 14:49

We now have an opportunity to break that pattern, but we must act now. In the next episode, I want to look at what happens when the decision to choose comes too late. Steel, chemicals, polymers, these are foundational industries that quietly underpin everything that we've been talking about. Industries that are disappearing from Britain right now. And once they go, the option to choose goes with them. Japan understood that. The question is whether Britain will understand it before the window closes. I'm Rob Gilbert. This is how we build Britain. Thank you.