EEF/Grant Thornton report shows manufacturing well placed to weather economic storms

This shows that manufacturing continues to enjoy a renaissance with a range of indicators showing that the sector enjoyed its best performance in a decade in 2007,and that companies have benefited from a range of measures that they have put in place to improve their competitiveness.

The report illustrates the rapidly changing face of manufacturing as companies shift to higher value activities with their competitive advantage based on an increasing emphasis on areas such as design, development and service provision. Furthermore, the report also shows the number of highly skilled jobs expanding despite the loss of unskilled work.

Commenting, Ian Smith, Chief Executive of EEF West Midlands, said:

“Manufacturers continued to record healthy growth last year despite a more challenging environment with oil prices rising and the dollar weakening. With fears of a recession in United States and turbulence in financial markets, the economic backdrop is likely to become less favourable.

“Given these circumstances the proposed changes to CGT and the uncertainty they have created could not have come at a worse time. Government must end the current impasse and reassure business that the medium to long term direction of tax policy will be supportive of investment.”

In the report, EEF’s analysis shows:

· The best conditions for manufacturing in ten years with rising levels of output and expanding employment levels

· Investment intentions in 2007 were the strongest since 1995

· Productivity in manufacturing was up by a quarter in the five years to the third quarter of 2007

· The number of companies reporting improving profitability has risen from -4% in 2003 to 34% in 2007

· The increasing dependence of manufacturers on overseas markets with one third of companies exporting half or more of their turnover.

· 35% and 28% of companies rate China and India respectively as a future major opportunity. The number of companies rating the new EU members as a growth opportunity has trebled since 2004.

· The motor vehicles sector saw an especially strong year with the highest output balances in a decade on the back of new models and consumer demand.

· Companies are constantly exploring new ways of responding to international competition with 39% citing new market entry as their top strategic priority and 71% increasing their innovation activity

· Although some companies expect to see some production and assembly move out of the UK in the next five years, seven out of ten expect the UK to remain their prime location.

Bob Hale, Head of Manufacturing at Grant Thornton, commented:

"Against a backdrop of profit warnings, falling business confidence and credit market turmoil, the UK manufacturing sector is at present something of a beacon in the dark. The strategic focus on new market entry is particularly positive, as it signals that many businesses within the sector are harnessing the strong growth rates still apparent in many parts of the world to counter the effects of a slowing domestic economy."

EEF West Midlands is the largest employers’ association in the region, representing primarily engineering, manufacturing and technology-based organisations. Serving those member companies is a team of 160+ staff providing a wide range of experience and expertise.

EEF West Midlands supports and advises on all aspects of HR including employment law and employee relations (ER). The ER team handles hundreds of employment tribunals for members annually. Other areas of support include health, safety and the environment. With its training centres, EEF West Midlands can also help develop the workforce required for businesses to succeed. Regionally and nationally EEF represents the interests of those determining the economic and social conditions in which employers operate.