Viewing UK's Green Industrial Policy from Port Talbot: Manufactured in the UK, or Designed in the UK?

From Steel Transformation to the Value Chain Blind Spot in the UK's Green Industrial Strategy

Port Talbot in South Wales was once the heart of the British steel industry. In 2024, Tata Steel closed its last blast furnace and invested £1.25 billion to build an electric arc furnace (EAF), with £500 million from the government. This transformation is expected to reduce carbon emissions by 90% and retain around 5,000 jobs. But if we view this change merely as an "update of the manufacturing process," we might miss the most critical question in the UK's green industrial strategy: Are we building "Made in Britain" or "Designed in Britain"?

In their latest analysis, LSE scholars Oliver Harman and Riccardo Crescenzi point out that in the "smile curve" of global value chains, manufacturing sits at the bottom of value, while R&D and design (upstream) and branding and sales (downstream) are where high added value lies. The Port Talbot case exactly exposes a structural bias in the UK's green industrial policy that tilts toward the middle segment of the smile curve.

Promises and Limitations of the Manufacturing Link

The new electric arc furnace can recycle scrap steel to produce low-carbon steel each year, delivering tangible carbon reduction results. However, the EAF itself is just a smelting facility, and its operation relies on clean electricity. To this end, the government pledged £64 million in March 2026 to develop the Port Talbot port into the first floating offshore wind hub in the Celtic Sea, targeting the unlocking of at least 4.5 GW of clean power generation capacity. This is a combination of first-nature geography and second-nature geography: natural resources like sea wind and deep water, together with existing industrial base, transport hubs, and free port policies, form the physical conditions for the transformation.

Yet, the value capture from the manufacturing link is limited. The electric arc furnace produces intermediate goods—green steel billets—which require downstream links such as design, engineering, and branding to become high-value end products. Currently, the UK's architectural design and structural engineering capabilities are concentrated in London and the Southeast, far from the steel-producing region; meanwhile, the branding and sales of "green steel" are often dominated by the locations of customers. This means the value created in manufacturing may flow out to other regions or countries.

The Underestimated Upstream: The Value of the SWITCH Research Centre

At the upstream end of the smile curve, Port Talbot possesses a severely underappreciated asset: SWITCH (South Wales Industrial Transition from Carbon Hub). This project, with an investment of £28 million, is jointly built by Neath Port Talbot Council along with Swansea, Cardiff, and the University of South Wales. It can accommodate 95 researchers, focusing on steel decarbonization technologies, scrap steel performance, circular economy supply chains, and more. This falls precisely under the peak of the smile curve—"R&D and design."But the scale of SWITCH is negligible compared to that of the electric arc furnace (£28 million vs £1.25 billion), reflecting the reality that government resources are tilted toward the manufacturing stage. However, it is precisely this kind of basic research capability that determines whether the UK can occupy the upper reaches of the global green steel technology race. Once research and development achieve a breakthrough, the resulting knowledge output will not only serve the domestic market but can also be exported to support the sustainable transformation of other countries—this is the true foundation of long-term competitiveness.

The High-End Positioning Obscured by the "Made in Britain" Slogan

In recent years, the UK government’s industrial policy narrative has frequently used the phrase "Made in Britain," yet it almost never mentions "Designed in Britain," "Engineered in Britain," or "Branded in Britain." These are precisely the links in the value chain with the highest added value. The case of Port Talbot shows that the policy focus is falling on the electric arc furnace itself—that is, the manufacturing link—while the downstream functions that connect to global markets, customers, and technology remain weak.

• The article’s author suggests that the political rhetoric of "Made in Britain" should be elevated to the level of "Designed in Britain." This means:
• Supporting local engineering and architectural design firms to master application standards for low-carbon steel;
• Cultivating a "green steel" brand to occupy the high-end market through certification and marketing;
• Building a complete ecosystem from R&D to branding, allowing UK companies—rather than foreign intermediaries—to capture value.

The Dual Logic of Regional Development and Global Connectivity

Another layer of significance in Port Talbot’s transformation lies in regional revitalization. Freeport policies, offshore wind investments, and the establishment of research centers are all attempts to transform South Wales from an industrial decline zone into a clean technology cluster. But regional success depends on industrial upgrading. If only the manufacturing link is retained, the area will remain at the low end of the value chain; if high-end functions such as R&D, engineering, finance, and trade can be attracted at the same time, then genuine "levelling up" can be achieved.

And none of this can be separated from global connectivity. Electric arc furnaces rely on imported scrap steel; green steel is exported to European automotive and construction supply chains; and even Celtic Sea wind technology connects with the international market. UK industrial policy must find a balance between "domestic manufacturing" and "embedding in global value chains," rather than retreating into closed-off industrialism.

Conclusion: Beyond "Manufacturing" – The Political Economy of Industry

Port Talbot offers a microcosm of the choice facing UK green industrial policy: Continue to target jobs and output, merely patching up the manufacturing link? Or seize the opportunity of transformation to systematically extend the country’s industrial capabilities toward both ends of the value chain? The former can save some jobs, but it is difficult to change the UK manufacturing sector’s value-added position in the global division of labor; the latter requires a bolder combination of education, innovation, and trade policies, and a recognition of the real significance of "design," "engineering," and "branding" for national competitiveness.In the net-zero race, steel decarbonization is just the first domino. Whether the UK can evolve from a 'nation of manufacturing' to a 'nation of design' will determine its final position in the industrial landscape of the 21st century.