Industry leader calls for 'optimism and realism'

Oct 22 2008 by Iain Laing, The Journal

A NORTH manufacturing industry leader called for “optimism and realism” as the CBI revealed the sector’s confidence had seen its sharpest fall for 28 years.

Alan Hall, region director of the manufacturing group EEF, tried to rally hope in the future of the sector as the quarterly CBI Industrial Trends survey also showed orders for UK-made goods had fallen at their fastest rate since 1999.

“What we need to do is look at the reality of the situation. While there is no doubt there are issues affecting manufacturers, which in some cases is leading to parlous order books and the loss of jobs, there is also an easing of cost pressures as oil prices fall,” he said.

“I talk to manufacturers every day and I am finding a lot of cause for optimism. There are a lot of solid companies out there which are doing well and there are lot of people suggesting that the current slowdown will be short-lived. This is not always reflected in the media coverage constantly saying how grim things are.”

The CBI was less upbeat about its report which showed that a balance of 60% of the 515 manufacturing firms surveyed said they were less optimistic about the general business situation than three months earlier, representing the fastest fall in confidence since July 1980.

In addition, companies’ perceptions of their total order book levels suffered over the quarter, with a balance of 39% reporting levels below normal, the lowest since October 2003.

Ian McCafferty, the CBI’s chief economic adviser, said: “This survey was conducted during a period of exceptional economic turbulence, so it is unsurprising that confidence has taken such a hit.

“However, the sharp falls in orders and output show that the slowdown in the UK economy is now spreading to sectors previously resilient to the weakness in the banking and housing markets.”

The survey comes ahead of the latest GDP figures on Friday, which are forecast to show the UK economy sliding into negative territory for the first time in 16 years. Experts are predicting a contraction in GDP, the first in 64 consecutive quarters, in what is set to fuel fears of a global recession.

Mr McCafferty added that it was “of serious concern” that manufacturers now appeared to be affected by constraints on capital, in a way that had not been the case earlier.

He said: “We can but hope that the recapitalisation of banks and the cut in interest rates, which took place just as the survey closed, will prevent a further credit squeeze over the winter.”

There are lot of people suggesting that the current slowdown will be short-lived