ANEW report insists that the North-East is still a manufacturing powerhouse.

EEF, the manufacturers’ organisation, and accountancy and business advisory firm BDO LLP shows that industry is increasing its importance to the North East economy with both the number of companies and total jobs growing.

According to the EEF/BDO Regional Manufacturing Outlook, the number of manufacturing businesses in the region has grown by 3.1% in the last year alone, while the number of jobs in industry has increased by 7% since 2010, representing the second highest growth rate of any UK region.

Overall North-East manufacturers have seen momentum continue to build throughout the past year, culminating in one of its strongest ever output balances. This impressive activity has been underpinned by strong demand, with order books looking healthy across the past 12 months, illustrating the region’s impressive turnaround from the lows of late 2015, the report claims.

Much of this growth is the result of the recovery in commodity markets. Chemicals is the region’s largest sector and will have been boosted by the oil price while the pick-up in the metals sector, on the back of rising steel prices and efforts to limit global production, will have boosted manufacturers in the region.

The North-East also exports 4.7 % of total UK manufacturing exports. The region does, however, depend significantly on Europe. It is the second highest exporter to the EU of any UK region. As a result, the North East is likely to be impacted disproportionately by any ‘hard’ Brexit which makes trade potentially more difficult.

Richard Halstead, Director of Member Engagement for EEF in the North, said:

“The report shows that industry continues to have an increasingly vital role to play in the North East. The last year has seen a strong performance with lofty heights being reached in the second half of last year and it is no surprise to see some easing back in the first half of 2018.

“There are well documented challenges going forward, not least those facing the automotive and construction supply chains. Furthermore, the progress of Brexit negotiations has the potential to be a factor in the future performance of manufacturers in the North East. Despite this, those companies who invest and innovate will still have the best long term prospects and can contribute to raising the productivity performance of the region and the UK as a whole.”

Steve Talbot, partner and head of manufacturing at BDO in the North-East, said:

“Local manufacturers have delivered another strong performance. Manufacturing is a real powerhouse sector for our regional economy, creating jobs and opportunities in both domestic and international markets.

“However, it is crucial the government delivers a long-term, practical Industrial Strategy to ensure a positive trading environment for businesses post-Brexit. Importantly, this will give firms the confidence to invest in automation and digitisation to help solve the all-important productivity puzzle that manufacturers in the North East are continuing to grapple with.”