Business

Manufacturers in North East see drop in output amid supply chain issues

Supply chain troubles and labour shortages are flattening growth prospects for North East manufacturers, new research suggests.

The latest survey from Make UK and business advisory firm BDO has been issues, painting a mixed economic picture for the region.

The overall national picture is largely positive, with the sector rebounding from the 10% fall in output seen in 2020, but companies in the North East have seen prospects fall away following a strong first half of 2021.

Read more:Go here for more manufacturing stories from the BusinessLive team

Make UK cites the wider supply chain disruption and current labour shortages for causing the drop, which has led to flat UK orders and total orders for North East companies in the last quarter, resulted in a fall in output.

Export orders, however, at a balance of +40% were among the strongest of any UK region.

Investment intentions by North East companies were also flat, while the North East was the only region to see recruitment intentions fall.

However, Make UK stresses that growth patterns for the medium to long term remain robust as economies open up.

Forecasts suggest that manufacturing output levels will return to pre-pandemic levels by the end of 2022, earlier than previous forecasts had suggested.

As a result, Make UK has retained a strong growth forecast for 2021 for manufacturing of +7.1%, tailing off slightly for 2022 to +4.4% – and if the forecasts are met, the region’s manufacturers will recover all its lost output from 2020.

June Smith, region director for Make UK in the North, said: “While the picture for growth for North East companies has flattened, prospects for the medium term continue to accelerate for manufacturers as economies at home and abroad continue to open up.

” However, supply chain shortages and the rapidly escalating increase in shipping costs are threatening put roadblocks on the road to faster growth despite the current optimism.”

Steve Talbot, head of manufacturing for BDO in the North East, said: “It has been a testing time for North East manufacturers.

“While investment levels in the region aren’t the highest, there is hope that we should see more positive moves as the industry becomes more confident of a future worth investing in.

“Manufacturers have proved their resilience over and over again, but we know big challenges remain.

“Increasing costs, rising inflation and the ongoing battle to attract and retain skilled workers will continue to stress-test local manufacturers for the remainder of the year.”

Most Related Links :
todayuknews Governmental News Finance News

Source link

Back to top button