East manufacturers should invest as markets grow

MANUFACTURERS in the east of England are consolidating their return to rapid growth according to the fourth quarter Manufacturing Outlook survey published by EEF, the manufacturers’ organisation, and accountants BDO.

This strong performance, which continues to be broad-based across all sectors, has been underpinned by robust demand from overseas markets, especially exports to the emerging BRIC economies, which have made a large contribution to export growth since the recovery began.

EEF reckons growth in UK manufacturing this year and next will be substantially ahead of growth in the wider economy.

The survey shows that manufacturers have also been recruiting new employees and making some new investments in response to the stronger than expected recovery in production.

In the east of England, nine in 10 reported either growing or stable output, and 93 per cent said that total new orders had been stable or had increased over the previous quarter.

Jim Davison, regional director for EEF, said: “Manufacturers in the east of England are working incredibly hard to sustain the recovery that started at the beginning of the year.”

But he warned: “The backdrop to ongoing growth through 2011 remains an uncertain one, particularly for those companies with a heavy reliance on publicly-funded contracts. And the strong bounce-back has also brought challenges, with some manufacturers struggling to get the skills they need and facing rising costs.”

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East of England manufacturing highlights include:

Total output up or stable for 91 per cent of regional manufacturers.

Total new orders up or stable for 93 per cent.

Employment is rising in 32 per cent of companies.

Planned capital expenditure is up or stable among 78 per cent.

BDO Partner Kim Ferris said: “This broad-based recovery shows that manufacturing can be the flag-bearer for the vital private-sector growth we need as impending cuts mean the public sector must take a back seat.

“Manufacturers now need to take advantage of this continued growth by investing in capital equipment and the skills within their workforce. They should also take the opportunity provided by the UK’s competitive currency to grow market share overseas both in the Eurozone and emerging markets.”