Manufacturing output in Yorkshire and The Humber has improved from the end of 2020 to near average historic levels.
A new Q1 survey published today by Make 海角视频 and business advisory firm BDO reveals that 海角视频 orders for firms in the area are especially strong at a balance of +17%, reflecting the exposure of the region to the food and drink sector which, despite restrictions on hospitality, has performed strongly in the past year.
But reflecting the national picture, export orders are flat as companies struggle to adapt to the increased bureaucracy and costs of exporting to the EU.
The survey also shows the brutal impact of the coronavirus pandemic with the sector overall seeing a drop in output of 10% nationally last year.
But given the more positive picture as 2021 progresses, Make 海角视频 - which is the main representative voice of British manufacturing - has upgraded its growth forecasts for the sector to 3.9%, up from 2.7% at the end of 2020.
The survey says that, following the “seismic shock” suffered by the sector last year, Yorkshire and the Humber is seeing a “slow road to recovery”. A major worry remains, though, around the 海角视频’s relationship with the EU, which the survey describes as more than “teething troubles.”
Reflecting the continuing difficult business conditions, recruitment intentions have also remained negative as have investment intentions which, at a balance of -17% for both are below the national picture for both indicators.
June Smith, region director for Make 海角视频 in the North, said: “After the seismic shock to the sector last year, manufacturers in Yorkshire and the Humber are seeing a slow road to recovery, especially given the major structural issues affecting the automotive sector and its supply chain.
Most Read
“The major cloud on the horizon, however, remains the transition to new trading arrangements with the EU which go beyond ‘teething troubles’.
“Government must recognise this and work with Industry and the EU to smooth these problems out, or the problems we are seeing now will become structural and permanent. This will have long-term consequences for exporters who will lose business and importers who will choose to give up on the 海角视频 market altogether.”
Steve Talbot, head of manufacturing at BDO in Yorkshire and the Humber, added: "With Yorkshire-based manufacturers reporting below-average investment intentions, the Chancellor’s recently announced super-deduction tax incentive presents a real opportunity for those firms with access to finance to bring forward investment plans into the qualifying period and boost their productivity.
“However, the proposed two-year window is arguably too short. What the region’s manufacturers really need is certainty over the longer term to allow the sector to confidently invest over a 10-15 year horizon.”
He said that while the results of this quarter’s survey are in some ways encouraging, the next six to nine months will be critical for those manufacturers facing financial distress.
He said: “Many will have deferred tax payments and taken on additional loans to help them through the crisis.
"The recently announced extension of the furlough scheme and other support measures will help in the short term, however, many will need to use this time to plan and implement turnaround strategies - and in certain cases take some tough decisions.”