(1) Scale of Manufacture
Each of four key industries which particularly depend on scale of manufacture and research – civil aerospace, defence, chemicals, pharmaceuticals – are a significant part of Scottish industry but they are clearly part of the wider UK industries and contribute to their economies of scale. So irrespective of the detailed numbers as of now, if Scotland were to separate itself from the UK, it will damage these industries particularly in Scotland itself.
(2) State Procurement and start-up assistance
Where an industry depends on state procurement and start-up assistance – as all defence and most civil aviation projects do – governments tend to choose big concerns because they are themselves bound by international and EU state aid rules. Particularly does this apply in the defence sector where the claim of national security is usually invoked to justify government assistance. No British government will source its naval or its super-secret radar and electronics hardware in a foreign country, and exemptions from state-aid rules in the defence field apply only to production in the country being defended.
Re-establishing the defence related research, design and production facilities currently in Scotland in England, Wales and Northern Ireland would take time and expense among the principal defence contractors like Thales and BAe Systems, but it would be done. Dockyards at Portsmouth and Plymouth would in fact be keen to host the new build Type 26 frigates and the fitting out of the new Prince of Wales aircraft carrier (sister ship of the Queen Elizabeth just launched by the Queen). Clearly BAe Systems and other contractors would offer jobs in England, Wales and Northern Ireland to many of those engaged on these projects on the Clyde and at Rosyth as they relocated the design and production facilities, but this would take time and money and represent a net loss of expertise to Scotland in these fields. About 40,000 of these skilled jobs could ultimately be transferred out of Scotland. …[more»]