BUSINESSES in the North East yesterday warned against “talking manufacturing down” after a report indicated the sector had shrunk at its fastest pace for more than two years.
The latest Markit/CIPS Manufacturing Purchasing Managers’ Index fell for its second straight month in November, and the figure of 47.6 was the lowest level since June 2009.
The report said output also fell, while new orders contracted for a fifth straight month.
Markit’s own senior economist Rob Dobson said producers were seeking to “scale back operating capacity in line with a darkening economic outlook”.
“The manufacturing engine has run out of steam,” he suggested.
Manufacturers’ organisation EEF conceded it was “not an encouraging number”, but warned against using the figure to judge the sector as a whole.
EEF’s regional manager in the North East, Tony Sarginson, said: “The main drag now appears to be on confidence across manufacturing as the economy is being buffeted by increasingly negative news and growing uncertainty in major markets.
“However, we should still be cautious in interpreting this as a widespread industry downturn, as recent data from the North East backed with anecdotal evidence from our region’s manufacturers’ still point to areas of growth and continued opportunities for expansion into new markets.”
Peter Bernard, of Gateshead’s Responsive Engineering Group, said it was important to “press forward rather than hide under the table”.
He said: “Certain pockets, like the construction sector, haven’t come out of the last recession yet and are suffering badly. However, there are other facets of the UK manufacturing industry that have.
“We’re still not back at the levels we were pre-recession, but we are pushing on.
“There’s a bit of concern and worry around, but unless you just go ahead and do something there’s a chance of just withering on the vine.”
Responsive Engineering announced in August that its pre-tax profits had risen from £261,588 to £872,626, with revenues up 13.4% to £11.2m.
Managing director Bernard said the 160-strong workforce’s order book was strong enough to support the hiring of around 15 more staff “if we find the right people”.
He said: “We’ve got the healthiest order book in our history. It’s a combination of overseas and domestic orders. We just received a $1m order from the USA and we have exports in South East Asia, the USA and Europe.
“The companies that are performing well and delivering quality products on time will win business. The UK has become more competitive with the devaluation of Sterling and people have to up their game, but you win if you perform well.”
A similar level of optimism was reported at Walker-based electrical engineers Houghton International, which said it was in the process of carrying out a £1.5m expansion and aiming to recruit over the next 18 months.
Both companies made the point that there are issues in finding the right skills in the region, and Bernard said measures being taken to address this would “take time”.
