About 750,000 manufacturing jobs have been lost since Labour came to power, a Trades Union Congress report has said.
The government is accused of lacking support for manufacturing
The UK gives less support to industry than any other European country, and has become the "weak wildebeest" of European industry, it claims.
This would remain the case while the British workforce was "easy to flog and easy to sack", the TUC said.
But the government defended its record, saying subsidies were not the best way forward for UK industry.
Separately, official figures showed manufacturing output grew for the second month in a row in May.
Output grew by 0.5% in May from April, outstripping analysts' expectations of a 0.3% increase, the Office for National Statistics (ONS) reported.
The annual rate of output growth was 2.0%, the highest since October 2003, the ONS said.
The TUC urged the government to halt the "dramatic" decline in manufacturing jobs by promoting workers' rights and business investment.
The organisation cited the examples of governments in France, Germany, Italy and Spain, all of which give more than double in state aid to industry than the UK.
The TUC said employers were wrong to keep down pay, increase hours and prevent workers' rights because of fears over losing business to China and India.
A quarter of jobs lost to low-wage economies were in high-tech industries, the congress claimed.
TUC general secretary Brendan Barber said the government needed to increase its support of manufacturing if the "made in the UK" label was to survive,
"With continuing low levels of government support and chronic under-investment, coupled with a workforce that is easy to flog and easy to sack, UK manufacturing will remain the 'weak wildebeest' of European industry," he said.
"These are the drivers of recovery on which the government's manufacturing
strategy review must focus."
Tim Page, a TUC spokesman, told the BBC that Britain's economy could not prosper without a strong manufacturing sector.
"Our economy is clearly doing very well, but the manufacturing industries of France and Germany, our competitor countries, have increased since 1997," he said.
"There are modern supports for manufacturing industry that our competitor governments take that are perfectly legal within EU rules.
"We are not talking about propping up lame duck industries."
'Exaggeration and rhetoric'
Speaking to the BBC's Today programme, Trade and Industry secretary Patricia Hewitt said the government was "in no way complacent" about the state of UK manufacturing.
Spain up 500,000
Italy up 400,000
France up 146,000
Germany up 116,000
UK down 580,000
Source: EU Commission
"There is a great deal of exaggeration and rhetoric," she said. "When you compare us with France and Germany, we don't have the same level of subsidies, but I don't think that higher subsidies are the way forward."
Ms Hewitt said there was low economic growth and high unemployment in France and Germany compared to the UK.
She said that for every manufacturing job lost in the UK over the past seven years, two new jobs had been created elsewhere in the economy.
Manufacturing productivity had improved by over 22% since 1997, the Department of Trade and Industry said.