Beleaguered sector has new hope, says report

Jun 1 2009 by nebusiness, The Journal

MANUFACTURERS believe the worst of the decline in the beleaguered sector will be over by the end of this year, according to a new report.

Company bosses in the North East are beginning to voice a growing optimism despite falling output and the increasing number of job losses, says the new quarterly survey by the manufacturers group EEF.

While North East manufacturers continue to report negative growth in their production and balance sheets, the figures are an improvement on the previous survey.

Although it expects job losses to continue throughout the year, EEF now believes the North East should start to see real signs of a recovery by the end of 2009. Firms in the North East and the West Midlands reported the biggest upturn in orders during recent weeks, albeit from a low base.

EEF regional manager Tony Sarginson said: “The fact that firms are more optimistic is very encouraging. It may be because most of them have already taken the steps necessary to ensure they can go on trading. Although I expect lots more job losses over the coming months, I would expect to see some signs of recovery by the end of 2009 and into 2010.” The news will come as some consolation to the industry following a series of high-profile job losses, including the axing of 150 staff with the closure of the Schott Industrial Glass factory in Newton Aycliffe announced 10 days ago, and the cutting of 120 jobs at Teesport with fears for the loss of 2,000 workers at Teesside Cast Products in Redcar. However, the survey did show that while jobs are still being cut and margins squeezed there are hopes of an upturn in some sectors such as the boost to the motor sector from the government’s scrappage scheme.

EEF now believes that manufacturing output for 2009 will be down by 11%, while 2010 will see a return to growth by 0.4%. The survey also showed that, given the lag effect of unemployment, the pace of job cuts has worsened over recent months in the UK with the number of unemployment people now over two million. However, almost all sectors in the North East are more optimistic about the remainder of 2009, with fewer bosses expecting to have to make additional cuts.