The road to prosperity or the road to nowhere? Teesside's manufacturing industry is approaching another crossroads as several roadblocks threaten to knock its recovery off course. Jez Davison reports.
UK MANUFACTURING was given a double boost in the space of two days this month.
First, car giant Nissan confirmed it would build the next version of the Qashqai model at its Sunderland plant - a move which is expected to safeguard 6,000 UK jobs.
The following day, BMW announced it was investing £500m to produce its next-generation Mini in Britain.
The schemes promise to accelerate lucrative opportunities through the Teesside supply chain, which is already gearing up for the £4.5bn Hitachi project that will see hi-tech trains rolling off a production line at Newton Aycliffe from 2016.
And before that, as early as this autumn, Thai firm SSI is bringing its Teesside steelmaking operations back online in a move that will create hundreds of permanent and supply chain jobs.
On the face of it, all appears well in a manufacturing industry that suffered more than most in the recession.
But the sector faces huge challenges that threaten to put its recovery in reverse. The first is the imminent arrival of a carbon price floor, which will effectively increase the amount of money electricity generators have to pay for their carbon emissions from 2013.
The move has sparked widespread criticism from power-hungry manufacturers who claim it will ramp up their energy bills by a fifth.
Business lobby group EEF said the move could force overseas investors to turn their back on Britain in favour of more competitive tax regimes elsewhere.
Tony Sarginson, EEF North-east regional manager, said: “There’s no doubt about it - the CPF will act as a disincentive for investment.
“It’s an unwelcome tax.
“If the Government is being serious about manufacturing and re-balancing the economy, they have got to look at how this will affect industry.”
The CPF was introduced as part of a wider drive to improve the carbon footprint and help the UK meet challenging environmental goals.
In a defiant show of commitment to the global green agenda, Energy Secretary Chris Huhne last week urged Brussels to increase from 20% to 30% the 2020 EU target for cutting greenhouse gas emissions on 1990 levels.
But businesses say the Coalition’s desire to be the greenest Government ever is compromising its aim of delivering sustainable private sector growth.