Region’s manufacturers see buoyant growth but supply chain disruption remain a challenge

North West manufacturers are seeing strong growth prospects as economies continue to open up and the economic recovery strengthens.

According to a major survey published today by Make UK and business advisory firm BDO, the sector which saw a 10% decline in output in 2020 is now set to recover a significant amount of that loss in 2021, with forecasts suggesting it will have recovered the total loss from last year by the end of 2022.

Make UK, added, however, supply chain disruptions and some labour shortages could hamper this improving picture in the final quarter of the year.

Both UK orders and total orders were very strong for North West companies in the last quarter, while the output balance of +63 was the strongest of any UK region.

The employment balance of +53% was also the highest of any UK region for the second quarter in succession, showing job prospects in North West manufacturers are improving dramatically as firms seek to meet demand.

As a result of the robust growth prospects and increased business confidence, investment intentions have also increased substantially.

According to Make UK, demand in the North West would also have been boosted by the recovery in the automotive sector, as well as the ongoing strength of the pharmaceutical sector, both of which have a solid presence in the region.

Make UK is now forecasting growth for the sector of +7.1% in 2021, tailing off slightly to +4.4% in 2022. Should these forecasts be met it will ensure the sector has recovered all the lost output from 2020.

June Smith, Region Director for Make UK in the North, said: “North West companies are seeing buoyant growth conditions as prospects 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.”

Graham Ellis, Head of Manufacturing for the North West, said: “Manufacturers have proved their resilience over and over again, but we know big challenges remain that will continue to stress-test North West makers for the remainder of the year.

“However, improved order books, output and employment levels are impacting investment intentions positively. The investment boost we have witnessed is indicative of an industry that is confident of a future worth investing in.”