Member Article

Survey shows growing concerns for North East manufacturing

Latest research from the North East Chamber of Commerce (NECC) indicates that North East businesses are already facing a tough start to the new year.

The region’s largest business membership organisation has released findings from its latest Quarterly Economic Survey (QES) of its membership for the last quarter of 2015, and although there is some optimism, there are several areas of concern, particularly around levels of growth and manufacturing.

NECC Director of Policy, Ross Smith said: “While the region’s businesses are continuing to deliver growth, the speed of this has slowed. Export sales have previously shown low growth for the past three quarters, but have dropped further, and investment plans have also fallen once again.”

The biggest concerns reported in the recent QES surround the manufacturing sector with manufacturers listing exchange rates, energy prices, business rates and staff costs among their growing concerns.

“A significant number of respondents have reported falling UK sales and orders,” said Mr Smith.

“Many are also struggling to maintain prices, and cashflow is now an area of significant concern. Although projections of turnover over the next 12 months remain fairly strong, there has been a significant drop in expectations of profitability.”

As the Chamber launches its Manifesto for 2016, NECC President Mike Matthews is working with members to improve the North East business environment.

“We must all do what we can to help in these circumstances,” said Mr Matthews.

“It is easy to imagine that, as the last recession fades into our memories, stable economic growth is now restored and can be taken for granted. These results remind us that, with a difficult exchange rate position, turbulence in many overseas markets, and a challenged oil and gas sector, businesses in the North East still face several headwinds.

“In saying that, we should be careful not to overreact to these figures. On the back of a great performance in early 2015, growth is continuing and our members are still confident of increased turnover and profits in 2016.”

The region’s workforce score continues to show a quarter-on-quarter increase in both the north and south of the region, perhaps surprising given the continuing fallout from the closure of SSI, and other major announcements towards the end of 2015.

“The proportion of NECC members reporting recruitment activity in the last quarter is strong and shows the labour market in perhaps better health than previously anticipated,” said Mr Smith.

“These numbers continue to represent growth, and the continuing strength in recruitment is good news. Our QES results demonstrate the resilience and ingenuity of NECC members, something that will always give us reasons to be optimistic. However, the concerns raised should give policy makers a serious reminder that this cannot be taken for granted.”

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →