A shock fall in output may have dashed hopes of an end to Britain's recession woes, but manufacturing continues to be held up as a cornerstone of the North-east economy. Marie Turbill reports.
AN UNEXPECTED drop in manufacturing output may come as a disappointment - particularly at a time when aspirations are high for the prospering sector to help the UK out of recession.
The Office for National Statistics (ONS) has revealed a 0.7% drop in manufacturing output between March and April, compared to the 0.9% rise the previous month.
But look elsewhere and reflections on the industry continue to be bright as a new report from PwC suggests Britain’s UK manufacturing industry is not only outsmarting the recession, but the stock market too.
While the North East Chamber of Commerce has praised the sector in the region not only for its ability to make but also to sell, particularly to global markets.
NECC chief executive, James Ramsbotham, said: “We’re a region that makes things and we’re a region that has become incredibly good at selling those things overseas.”
In terms of exports the North-east has the healthiest balance of trade of all UK regions.
“We’re particularly strong in automotive, the process industries and the oil and gas sector and the recent re-ignition of SSI’s blast furnace heralded a welcome return of steel making on Teesside.
“Our manufacturing strength, this ability to make things that people want, can be charted by our success in opening up overseas markets.”
Figures out this month showed the year to March 2012 was another record 12 months for the region on international trade.
In the first quarter of 2012 the region increased its exports by 0.1%. Not a great success it would seem at first glance – but when you consider overall UK exports shrank by 2% in that time that achievement appears much more notable.
Even more so given that the region already exports more as a proportion of our economy than anywhere else in the UK.
A comparison with the same period last year shows a 6% increase in the North-east – well ahead of the 4% national figure.
Mr Ramsbotham said: “One of the main reasons for this success is the way North-east businesses have increased trade outside of the EU, with an astonishing 20% increase in sales to the rest of the world over the past year.
“With the Eurozone crisis threatening our nearest market, that achievement is a very significant boost for our economy.”
And despite forecasts of the outlook for exports weakening, he said NECC’s international trade team has been even busier in the past month with early indications that their next Quarterly Economic Survey will point to further export growth.
The strength in wider UK manufacturing has also been highlighted by a new report by PwC which found UK manufacturing is not only outsmarting the recession but the stock market too.
As other sectors, including the financial sector, struggle to ride the ongoing recession, PwC’s From Crisis to Growth report shows that not only has UK Manufacturing Plc’s share price index trebled since 2009, but anyone who had invested would have doubled their money over the past five years.
Jonathan Greenaway, partner in PwC’s Newcastle office, said: “The businesses we looked at restructured, re-strategised, became agile and flexible and looked to emerging markets for future growth.
“The strategies they implemented were not only crucial for survival, they have proven to be sustainable.”
Measured alongside global export growth to emerging markets, they found the UK still has some way to go to catch up with its peers, but recent financial performance of the UK manufacturing industry suggests it is in strong shape to regain some of this loss.
Mr Greenaway said: “This is a great time of opportunity for manufacturers, and this report shows that UK companies are really rising to the challenge.
“We have many successful, highly innovative and well managed manufacturing companies here in the UK – though perhaps just not enough of them.”