Manufacturing sector remains ‘critical’ to health of region’s economy

The manufacturing sector remains critical to the health of the West Midlands economy, with the total number of highly-skilled jobs growing by 3.7% since 2010, a new report reveals.

The EEF/BDO Regional Manufacturing Outlook report shows that the region has the second highest number of manufacturing businesses in the UK (behind London & South East) accounting for one in ten jobs and approaching one fifth of the West Midlands’ economy overall.

In line with the broader manufacturing trend across the UK, local manufacturers have seen a tailing off in activity and demand from the lofty heights recorded last year. That said, average output, total orders and employment balances for the past year all remain healthy, and regional manufacturers have had a strong year despite the recent slowing.

Mechanical equipment manufacturers in particular have benefited from the global upturn and the supportive boost sterling’s depreciation is having, while metals – despite construction’s poor performance – have been boosted by rises in steel prices and measures to reduce global supply.

Overseas, the West Midlands remain a strong export performer, accounting for 11.9% of total UK manufacturing exports in 2017 – the second highest of any UK region. The region also has the lowest exposure on exports to the EU (44.1%) with its trade spread evenly across the globe.
The international outlook of companies in the region is highlighted by the fact the West Midlands has the highest proportion of exports of any UK region heading for North America (19.9%) and Asia and Oceania (22.7%).

Charlotte Horobin, region director for EEF in the West Midlands, said: “The report shows that industry continues to have an increasingly vital role to play in the West Midlands. 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 going forward, 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 West Midlands. 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.”

Jon Gilpin, partner and head of manufacturing at BDO in the West Midlands, said:
“Local manufacturers have delivered another strong performance. Manufacturing is a real powerhouse sector for our regional economy, creating jobs and opportunities in both domestic and international markets.

“Our export potential is huge but it is crucial that 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.”