Manufacturing in figures: Economist Brian Eaton reports a strong start to 2010

Economist Brian Eaton gives Northwest manufacturers a standing ovation for making big impressions in highly competitive global markets.

'Do not judge a person until you have walked two moons in his moccasins'.

That has always been a saying of the great Indian Nations of North America. Alas, it's not advice that most business correspondents heed when they decide to put their fingers to keypads.

In spite of an impressive array of businesses progressing in highly competitive global markets they seem unaware of these success stories taking place especially in the midst of new challenges.

Instead these commentators express gloomy sentiments about future trends in manufacturing.

Some recent press reports homed in on UK trade figures for January 2010 highlighting a fall-off from December 2009. Apart from the need to display caution on the basis of a single month’s figures thank goodness that at least one observer noted that some “snow-bound manufacturers” would, in any case, have had difficulties transporting their goods to the ports!

Most reports, however, suggest that despite the UK’s move out of technical recession, progress is likely to be fragile and that the economy is some kind of “shrinking violet”. These assertions have no place in describing Northwest Manufacturing!

It seems to me that the majority of media pundits are missing the more positive aspects of Manufacturing. And there are plenty of those to go around.

There have been notable successes achieved ranging from meeting local demand to penetration of the increasingly important globally emerging markets. These advances can claim a valuable input from Northwest England’s Manufacturing Sector. Their attainment during a period of world economic slowdown is deserving of applause!

Indeed Northwest Industry, despite having to combat the severe global down-turn, has provided numerous examples of successful perseverance in challenging market areas. And it is appropriate that the EEF, the Manufacturers’ organisation, launched manufacturing week to promote the success of Manufacturing and policies for a better balanced economy.

Figures are better-than-anticipated in the Northwest according to a survey released by EEF and BDO. EEF Northwest Region Director, David Ost, told delegates that 2010 began better than expected, suggesting confidence levels were at their highest since mid-2007.

ONS data corroborates just that. It indicates that overall UK output grew then by 0.3% and not 0.1% as reported in the preliminary estimate. Also, crucially, in Manufacturing output was revised from 0.4% to 0.8% in the 4th quarter of 2009 because of growth in industries including refining of energy products, chemicals, metals, and engineering.

The bright side

Innovation in new markets is an excellent example of positive progress.

Emerging nations are becoming major players: the importance of the BRIC nations, Brazil, Russia, India, and China, readily comes to mind. Earlier this year, for instance, China announced that it was targeting 8% growth for 2010. And International Trade Director for UK Trade & Investment Northwest, Clive Drinkwater, indicated at Greater China Business Awards that the Northwest’s exports to China increased between 2007 and 2008 by 32% from £471 million to £ 623 million.

These stats should generate some positive feel relating to our trade situation.

The resilience of Manufacturing in Northwest is further demonstrated by recent performance on the critical export front. The latest HM Revenue & Customs Annual statistics relating to UK Regional Trade in Goods shows that in 2009 the Northwest had exports of £23.8 billion, second only to South East England.

The versatility of the Northwest is shown by the fact that this Region is in third place in terms of export of goods to the other 26 members of EU27. Export of goods to other EU nations from Northwest England in 2009 totalled £11.9 billion.

The story does not end here

There has also been a healthy level of exports of goods from the Northwest over recent years including £23.8 billion in 2009 after £23.7 billion in 2008, £21.0 billion in 2007, and £23.7 billion in 2006.

Recent trade figures are, given the competitive circumstances, more encouraging than some pundits have been willing to admit. For instance, UK imports of goods actually fell by £35.7 billion or 10.5% to £305.8 billion between 2008 and 2009. The Northwest net decline of imported goods for the same period was £2.9 billion or 11.3% to £22.7 billion.

Trade relationships are extremely complex. In addition to meeting home consumers’ demands imports from abroad also include key components and supplies that home manufacturers require to produce a quality product.

Northwest on top

Northwest England continues as the UK’s largest manufacturer. At September 2009 this Region accounted for some 348,000 employee jobs in manufacturing which accounted for 13.7% of the GB figure. So, Manufacturing is considerably more robust than some of its critics would suggest! The latest data saw steady increase in the Northwest to a figure of £19.6 billion which accounted for 16.8% of all activities: the second highest of the fifteen sectors analysed.

A changing industry

Rather than being in strife the sectors are in fact all in a transitional period. Which is why the definition of manufacturing is becoming increasingly more complex. In the Northwest new industries have developed over the past few decades, such as in photonics, nanotechnology, and low carbon energy.

It's difficult to keep pace with continuous developments “on the ground”.

And manufacturing can no longer be judged alone. It is inextricably linked with the other major parts of the economy. And the multiplier effects of enterprises such as BAE Systems, Britain’s biggest manufacturer, and pharmaceutical giant AstraZeneca are immense.

Some operations are not officially designated manufacturing yet play an integral part in manufacturing development, for example BIS Industrial Services in Runcorn - a leading UK industrial services supplier - has recently secured its largest single supply contract with BP worth £100 million over the five year contract term, to meet demands in key sectors such as oil & gas, refining, chemicals, power and energy.

Few would deny the world-wide impacts and the challenges that a global recession has brought. But, haven't there been too many gloomy assertions about the current, albeit severe, situation?

There is a danger that, through becoming over-engrossed in our own situations, we place insufficient emphasis on the positive side.

After all, every generation will face new situations and, more importantly, opportunities.