Why is the production of goods (manufacture) so important?

My Dad runs a company that manufactures various products for the gardening industry. He's always saying that the U.K. government treats small-medium sized manufacturing businesses harshly and that this would eventually lead these companies to either go bust or take move production elsewhere (China, Eastern Europe, etc.). He's reticent about moving his business overseas because he believes that manufacturing is an incredibly important part of the economy. I'm not saying he's wrong, but I can't see why the U.K. would be worse off if say we were all employed in the service sector for instance. Does it have something to do with a trade imbalance?