Manufacturing sector begins road to recovery

New figures published by Make UK suggest that the north west's manufacturing sector has begun to recover from the coronavirus pandemic, but experts warn a no-deal Brexit would reverse fortunes once more.

A new survey conducted by BDO shows that the balance of orders stands at -29% and output at -6%. While these are still in the negative, they represent a significant improvement over the previous quarter.

Recruitment and investment prospects are both flat, but this again shows improvement over previous findings.

The aerospace and automotive sectors remain badly affected by the coronavirus pandemic, but there has been better news for the pharmaceuticals and chemicals industries.

June Smith, region director for Make UK in the North, said: "Manufacturing has begun to climb away from the abyss that it stared into earlier in the year. But, make no mistake it is going to be a long haul back towards normal trading conditions, with talk of a V shaped recovery nothing more than fanciful.

"Having emerged from three years of political uncertainty at the end of last year, increasing talk of a final ‘no deal’ exit from the EU would be a final nail in the coffin for many companies. If we are to avoid this and, the avalanche of job losses that would follow in already hard hit areas and sectors, it is essential that the first step towards a fuller recovery is provided by a comprehensive trade agreement with the EU."

Graham Ellis, head of manufacturing at BDO in the North West added: "While the manufacturing industry has managed to claw back some lost ground from a dismal Q2, the subdued level of investment intentions across the region is a real cause for concern.

"With a no-deal exit from the EU - and associated logistics, customs and cost implications - looking increasingly likely, British manufacturers will need to step up a gear in order to compete internationally, and this will require significant investment in productivity and digitalisation improvements.

‘No-one is in any doubt about the financial challenges facing manufacturers, but failing to invest now will have serious medium to long term implications. The government must be alive to this risk and provide the support required to help UK manufacturers through this transition period and beyond. Other countries - perhaps in particular Germany - do provide good examples of consistent long term support to their manufacturing sectors. The UK should look to adopt a similar approach."

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