Jobs boost for West manufacturers – but Brexit talks and productivity cast shadows, survey shows

July 16, 2018

The strength of the South West’s manufacturing sector – and the challenges facing it – have been highlighted in a new annual survey which reveals that jobs in the sector have risen by more than 5% since 2010.

According to the report from manufacturers’ organisation EEF and national accountancy firm BDO, manufacturing represents 11% of the South West’s economy – slightly higher than the national average of 10% – with 12,180 companies. 

Between them they employ 247,000 people – an increase of 5.1% on the total eight years ago – while more of those that sell overseas may escape any downside from Brexit as the region less than half of exports go to the EU.

The EEF/BDO Regional Manufacturing Outlook report also shows that despite recording growth in its output and order balances over the past year, South West manufacturers had a slightly more mixed year in comparison to other UK regions.

Productivity levels – an issue that has dogged UK manufacturing for many years – is also under par in the South West, coming in at 96.4% of the national average.

The report points out that export demand continues to provide the bulk of growth in the region, with the large presence of manufacturers in the high-performing aerospace sector driving expansion – a key factor in the week of the Farnborough Airshow when aircraft orders worth billions of pounds from around the world are traditionally unveiled.

The region could also benefit from the fairly even global spread of its exports – it has one of the lowest exposures to the EU market compared to other regions and the second highest proportion of exports heading for the Middle East and North America. It also enjoys an above average proportion of goods destined for Asia and Oceania.

However, EEF South West director Jim Davison recognised the challenges faced by the sector, particularly around Brexit – with high-profile warnings from its largest manufacturers including aerospace giants Airbus and Rolls-Royce in Bristol and car makers Honda and BMW, which have plants in Swindon, in recent weeks over the possible threats to jobs and investment from a ‘hard Brexit’.

He said: “The report shows that industry continues to have an increasingly vital role to play in the South West. 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, 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 South West. Despite this, those companies that 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.”

BDO partner and head of manufacturing in the South West, Neil Dimes, picked up on the productivity challenge, adding: “Local manufacturers have delivered another strong performance despite facing challenges.

“They are a real powerhouse sector for our regional economy, creating jobs and opportunities in both domestic and international markets. However, our productivity levels are lagging behind and that is something all firms will need to address.

“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 South West are continuing to grapple with.”

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