New figures show drop in manufacturing industry insolvencies

The region’s manufacturing industry has seen a drop in the number of insolvencies but new figures show the continuing struggle in the construction sector.

Insolvencies have decreased in the North East and Cumbria compared with the fourth quarter of 2012, according to PwC figures.

In the last three months the regions have seen 18 insolvencies, seven less than the 25 in Q4 of 2012.

Overall there have been 155 insolvencies in the area in the past 12 months and Q1 saw a slight increase in figures compared with the same time-frame of 2012, going from 17 insolvencies to 18.

Richard Lingwood, director, PwC Newcastle said: “The reduction in manufacturing insolvencies in the North East is encouraging but with rising raw material costs and no imminent signs of a material economic recovery, the outlook remains tough for those companies already experiencing financial stress.”

The construction sector in the region is still struggling, with figures showing 252 total insolvencies in the last year.

In quarter one of 2012 the industry went from 34 insolvencies to 37 and the last quarter also saw an increase from 29 in Q4 2012 to 37 in Q1 2013.

The construction and manufacturing industries remain the worst affected and the figures show a combined total of 55 insolvencies over the past three months.

Jonathan Greenaway, Partner, PwC Newcastle, said: ’’The sector in the UK is still experiencing declining output year on year so we are not necessarily over the worst yet in terms of insolvencies.

“There is an ongoing cash squeeze throughout the supply chain as has been evidenced in recent reported results.

“The measures in the recent budget to support infrastructure, and in particular levels of house-building are welcome but will take a little while to feed through into output.’’