North will weather the credit storm

Apr 15 2008 by Peter McCusker, The Journal

THERE is a lot of ongoing discussion about what the implications for the North East will be of the credit crunch.

Opinion is mixed, but there does appear to be resilience in the regional economy which indicates that North East business, for the most part, will be able to weather the storm.

For those not so close to the industrial part of our economy it is a common misconception that manufacturing is a relic of our industrial past and can no longer thrive in today’s service-led, post-industrial economy. The reality is very different.

The UK is the world’s sixth largest manufacturing country and home to some world-beating industries, many of which operate in the North East.

Manufacturing accounts for 13% of our national wealth and half of the UK’s goods and services sold overseas.

And while some sectors are struggling in the current economic conditions – retailers are feeling the pinch as shoppers tighten their belts, and financial services are battling the credit crunch – manufacturing is so far proving resilient.

Part of this strength comes from the diversity of manufacturing in the UK, from pharmaceuticals to car manufacture.

The automotive sector in the UK now produces twice as many cars today as 25 years ago, and is home to seven of the world’s largest automakers, with one of the most efficient, Nissan, on our doorstep.

The government’s review of manufacturing strategy and the new focus on ensuring competitiveness in the UK’s automotive industry are welcome steps, but there is more to do.

The UK is only just getting to grips with the rapid evolution of modern manufacturing businesses, and the impact that the unprecedented mobility of production will have on the economic strategies of individual countries.

But, the greater challenge is that we lack a clear idea of what we want the UK manufacturing sector to look like in the future.

Without a concerted effort to articulate the long-term goal we will struggle to identify and implement the policy mechanisms required.

Liz Smith, Assistant Director, CBI North East