Success as firms meet global test

Mar 25 2008 Evening Gazette

MANUFACTURING firms have adapted to the challenge of global competition and are starting to reap the dividends despite the current financial crisis, according to a new report today.

And the picture is echoed on Teesside where local firms are seeing economic success on the back of expanding their global horizons.

The Engineering Employers Federation (EEF) said fewer companies were reporting being affected by price competition in the markets in which they traded.

The challenge from low cost economies was firmly on the “radar” of UK business organisations and they were responding by becoming more innovative.

EEF chief economist, Steve Radley, said: “This survey paints a positive picture of how manufacturing companies have adapted to the challenge of the global environment. Instead of competing on price alone they are adopting a range of strategies to take advantage of emerging markets.”

Stillington-based Darchem Engineering, which has been established in the region for half a century and is a world leader in the manufacture of insulation systems for use in the aerospace, energy and marine sectors, has seen its markets develop.

“The aerospace market is still dominated by North America and Europe,” said John Padbury, marketing director at Darchem, which employs 600 on Teesside and 130 in Gloucester.

“But in terms of oil and gas, it’s more spread out and we have won contracts in the Middle East and Far East.

“Companies are now looking more globally than they were 10-15 years ago. Ten years ago we exported about 20%, that figure is now 40%.”

The report added cost efficiency was vital for manufacturers.

Mr Padbury added: “There has to be continuous improvement and a drive for lean manufacturing to keep a company competitive as markets are not getting any easier.”

Tom Lawton, of business advisers BDO Stoy Hayward, which helped with the research, added: “The competition from emerging markets is likely to increase as these new economies move further up the value chain.”

Comment: page 18