THE region's hard-hit manufacturing sector must embrace the service industry to turn around ailing fortunes, according to a leading businessman.

David Bowles said production companies could no longer expect to keep in-house all the expertise needed to be successful and expansive.

Instead, firms should outsource work to organisations that have the appropriate skills and talent, he said.

Mr Bowles, chief executive of Northern Defence Industries, was speaking at the third annual conference of the Service Network, an organisation which aims to promote growth of the service sector in the region.

The network launched a Winning Business campaign highlighting the virtues of service work in the wider context of business.

Mr Bowles, chairman of the network, said: "The service sector is a critical part of the business mix.

"There has never been a more important time to leverage the skills and expertise of the North-East's world-class professional services.

"The service industry working in strategic partnership with the manufacturing industry is a formidable combination."

The comments came at the same time as the Office for National Statistics released the latest estimated gross domestic product figures for the UK.

The data showed a striking contrast between the production industries and service sector, with the latter seeing growth of 0.7 per cent but the former unchanged on the previous quarter.

More than 50,000 people are employed in the service sector in the North-East.

Forty five per cent are graduates.