Tees can rideout the storm

May 12 2008 Evening Gazette

A TEES engineering chief has claimed local manufacturers are well placed to weather an economic storm which according to new research has put them under the strongest cost pressures for 20 years.

The Confederation of British Industry (CBI) said SME manufacturers were being hit by falling demand for goods and were having to pass on rising fuel and raw material costs to customers.

But Malcolm Potter, director of engineering group TVEP, believes increased investment in the area is boosting business opportunities for Tees manufacturers and cushioning the effects of rising costs and the global credit crunch.

He said: “The Tees Valley is benefiting from billions of pounds worth of investment in key sectors such as nuclear power and waste management. Corus is continuing to invest in new plant, the pharmaceutical sector is buoyant and the oil and gas industry is resurgent once more.

“The credit crunch is slowing things down, not putting them in reverse, and the outlook is pretty favourable.”

The CBI said businesses were becoming increasingly pessimistic about the overall business situation, and optimism about export prospects for the year ahead was lower for a net 10% of firms. It said plans to invest in plant and machinery have weakened since January, while intentions to invest in buildings have improved slightly but remain weak.

Despite the gloomy findings, however, the research revealed that overall SME manufacturers had expanded their workforce over the past three months, with a net 12% of smaller firms taking on more staff - the highest since April 1995.