RIDING THE STORM
LOCAL business chiefs remain bullish about prospects for manufacturing after a Confederation of British Industry report said the sector was facing its fiercest cost increases since 1980.
The CBI’s latest Industrial Trends survey showed that in the past three months average unit costs rose for 65% of UK manufacturers, on the back of soaring oil, raw material and energy prices. The report also said the number of firms increasing domestic prices was at the highest level since April 1995.
There was a let-up in the pace of job shedding over the past three months, with the slowest rate of job losses since October 2004, but the CBI forecasts 26,000 jobs will go in the third quarter of 2008.
But North-east business leaders said Teesside’s strength in the process, chemical, oil, gas and offshore sectors was allowing local manufacturers to withstand the difficult trading conditions.
Ross Smith, head of policy at the North East Chamber of Commerce said Teesside’s exporting activities were boosting revenues and allowing firms to offset some of their cost increases.
He said: “The North-east is the only region to have a consistently positive balance of exports over imports. We are as well placed as any other region to ride out the economic troubles. Manufacturers operating in high value-added industries - including the chemical and process sectors - are faring slightly better than companies in the service sector.”
But, he added, rising energy costs were becoming a “real concern” to many of the NECC’s 4,500 members, which account for around one third of the North-east’s workforce.
“Firms are calling for a diversity of energy supplies to keep costs down,” said Mr Smith.
“They believe an investment in nuclear power and other renewable sources such as wind and solar energy is essential.”
Tony Sarginson EEF’s regional manager for the North-east, said energy was becoming the “number one” issue for local firms.
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