North West remains UK’s manufacturing powerhouse

The North West is the most productive and largest industrial area for manufacturing in the UK.

That’s according to a new report out today from Make UK, the manufacturers’ organisation, and accountancy and business advisory firm BDO.

It shows that manufacturing remains central to the success of the North West economy with the region worth £28.5bn in the last year.

The report, analysing the overall status of industry in the region over the past 12 months shows that North West manufacturers have remained in a healthy position despite the global downturn and uncertain political environment, with output and order balances above the UK average.

In line with the national picture, however, employment and investment balances have eased as conditions have become more difficult.

The pharmaceutical and chemicals sectors are significant contributors to North West industry, accounting for almost a third of regional output.

Pharmaceuticals, in particular, is an especially strong performer and has led to the North West being the UK’s most productive industrial region at 114.55 of the national average.

Transport, especially aerospace, has also been a strong performer for the region on the back of strong order books and a seemingly insatiable demand for air travel. It now accounts for almost one fifth (17%) of North West output.

The region also continues to be a strong export performer, accounting for almost 8.2% of total UK manufacturing exports.

The EU is now the region’s main export destination (51.3%) followed by Asia and North America. The last 12 months have seen a notable expansion in exports to the Middle East and North Africa, which now account for almost 10% of North West exports.

Graham Ellis, head of manufacturing at BDO in the North West, said: “Whilst the growth of manufacturing in the North West gives reason to be optimistic, the survey demonstrates the disproportionate impact a no-deal Brexit could have on the UK regions where the majority of trade is within the EU.

“With over half of exports from the North West going to these markets, there is a risk that future growth will slow significantly.

“Companies are already holding back on investment as a result of the prolonged period of Brexit instability and risk lagging behind their global competitors when it comes to the uptake of industry 4.0 processes and technology.

“It will be difficult for many manufacturers to regain lost ground in these areas, particularly as digital transformation picks up pace.”

He added: “The region’s contribution to the overall UK economy should not be underestimated.”

June Smith, director of member engagement for Make UK in the North, said: “The report shows that industry continues to have a central role to play in the success of the North West economy. The last year has seen a strong performance, despite the uncertain political environment and global markets.

“There are well-documented challenges going forward, not least those facing the automotive and construction supply chains and the global economic downturn.

“Furthermore, the outcome of Brexit has the potential to have an impact on the future performance of manufacturers in the North West given the region’s exposure to it as a major export market.

“Despite this, those companies who 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.”