Manufacturing in figures - The Northwest finds strength in diversity

Economist Brian Eaton declares that the region’s manufacturing industry shows clear potential in spite of adverse conditions

Even casual observers must have become increasingly disillusioned with the lack of objective reporting when it comes to manufacturing. Some pundits almost seem to express surprise when companies indicate that they are experiencing robust demand. Instead they seem to prefer to broadcast gloom and doom stories. They fail to recognise the amazing degree of diversity in the Northwest manufacturing economy. This applies to companies pursuing success in the longer established and exciting emerging market opportunities.

Positive signs, in this the high point of global recession, have been the number of combative niche companies winning orders in challenging conditions. And the latest official ONS data confirms the Northwest as the country’s leading performer.

Not least that in June 2009 the Northwest was the only region in the UK to provide more than 350,000 jobs in manufacturing. In fact, we were the only region to reach the 300,000 mark. In that month the Northwest accounted for 13.7% of Great Britain’s figure. This was closely challenged by the Southeast with 295,000; and West Midlands with 284,000.

So while nationally jobs fell by 216,000 (7.8%) to 2,564,000 between June 2008 and June 2009, the Northwest decline was 24,000 (6.4%).

It’s all about manufacturing the figures

It’s all too easy to under-state the importance of the manufacturing sector despite the fact detailed figures confirm its high status. The latest official ONS sector analysis of Headline Gross Value Added (GVA) at current basic prices indicates that of all 15 sectors analysed only one, namely ‘Real Estate, Renting, and Business Activities’, was ahead of manufacturing in the Northwest. In 2007, Northwest manufacturing GVA totalled £19.6 billion accounting for 16.8% of Northwest GVA in all activities.

In no Northwest county was manufacturing below second place. In fact, manufacturing is the leading sector in Cumbria and Lancashire accounting for respectively 26.6% and 22.1% of total activities. The highest county manufacturing GVA figures are in Greater Manchester with a figure of £5.9 billion (12% of all activities in that area). Following is Lancashire with £5.0 billion, Cheshire with £4.4 billion, Merseyside on £2.3 billion and Cumbria on £2.0 billion.

Northwest enjoys success on an international stage

In extremely demanding global market conditions the Northwest is competing fiercely on the export front especially in terms of goods produced. In the first six months of 2009, customs and excise data suggests that the Northwest exported at least £11,322 million of goods (approximately £11.3 billion). This figure had only fallen marginally by £539 million (4.5%) compared with the first six months of 2008.

The Northwest continues to secure valuable global contracts. Nationally the UK experienced a 17.2% decline in export of goods to the rest of the EU 27 (a 14.7% decline for regionally-allocated) and a 14.2% decline in exports to non-EU locations (a 14.3% reverse for regionally-allocated). The Northwest performance was stronger with a 7.8% decline for goods to the rest of the EU27 and a very marginal decline of 0.2% for goods embarked to the non-EU locations.

So, it seems that the media does itself little credit with its over-dramatic presentation of the quarterly national output figures. The impression is given that any slight fallback from a previously suggested improvement must be the harbinger of economic collapse on a grand scale!

In actual fact, real life is more complicated than that. Superimposed on the global and local terrain are factors such as potential pandemics, political turmoil, environmental and climate change considerations, as well as devastating local situations. The recent floods in Cumbria emphasises the severity that such events can bring to the local situation. Business Link indicated that there are nearly 36,300 firms in the region at risk of flooding.

The current global situation is extremely challenging and will take time to fully resolve.

And action

Chancellor Alistair Darling suggested that the UK economy would shrink by 4.75% in 2009 compared with his April Budget estimate of 3.5%. However, he also expressed confidence that the economy would turnaround in 2010 predicting 1.5% growth. Interest rates remained at a historic low of 0.5%. The Bank of England also chose not to alter its quantitative easing scheme to boost the money supply leaving the current total at £200 billion.

Progress, certainly here in Northwest Manufacturing, is being driven by an increasingly innovative market, and cost-conscious sector. There were some 17,485 local manufacturing units in VAT and/or Paye-based Enterprises in 2008.

And it doesn’t take long to discover a hive of positive action around the region: The Manufacturing Institute (TMI) and the Manufacturing Advisory Service (MAS) which it delivers, remain key players in the region’s drive for manufacturing excellence and efficiency. Indeed, as well as seeing notable increases in productivity, MAS benefits the sector with its hands-on support provided by expert practitioners who provide an immense range of practical knowledge and skill which is there to benefit local industry.

And the Northwest Regional Development Agency (NWDA) has launched its new Northwest Manufacturing Strategy and Action Plan providing a ten-year framework for the development of manufacturing in this region.

The strategy supports the development of an innovative, enterprising, highly skilled, and well-led modern productive industry with a boost of £20 million for the enhanced Northwest Manufacturing Advisory Service (MAS) from the European Regional Development Fund (ERDF) programme. Thus keeping MAS central to the region’s strategy, which aims to advance the Northwest as the UK Centre of Manufacturing Excellence (MAS has already assisted businesses to generate financial returns totalling £739 million since 2002, nearly £1.9 million per week, and to create or safeguard 8,790 jobs).

If these players can draw on one thing alone, it will be the strength in diversity that the Northwest manufacturing industry offers in such abundance.