Greg Wright: Success stories may not be enough to pull us out of mire
While retailers crumble, some exporters are groaning under the weight of record order books, and frantically seeking staff.
Last week, I received two phone calls about Scarborough-based businesses which illustrate the growing divide between winners and losers in 2012.
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Hide AdThe first call, from an anonymous source, told me that the Discovery Store, a firm with 20 shops selling gadgets and gizmos, had closed and all the staff had lost their jobs.
My source was desperate to find out more, because many of the company’s former workers wanted to know if they were going to be paid. With a little digging, I tracked down documents which proved that the Discovery Store had gone into administration, and its staff had been told by administrators that it was insolvent.
To economists, it’s another grim statistic. To the firm’s workers, it’s a tragedy. Many could face a lengthy period of unemployment, as the UK economy hovers between tepid growth and recession.
A few days later, I received another phone call from Scarborough, but it seemed to come from a different world.
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Hide AdThe cheery voice of Peter Wilkinson, from the engineering firm Unison, told me the firm was desperate to hire more staff, because it had reeled in a year’s worth of orders in the space of a month.
There was a real danger, he said, that Britain could be talking itself into a recession.
Unison’s order books are much bigger now than they were during the boom years of 2004 to 2007.
His words would have been music to the ears of David Cameron and everyone who dreams of an export-led recovery.
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Hide AdAt a time when the media is obsessed with property and retail, it’s wise to remember that firms like Unison are quietly winning work overseas, and hiring staff on the back of it.
Unison, which has 40 staff and turned over £3m last year, already supplies tube-bending machines which are used to make parts for Wal-Mart shopping trolleys and Chinook helicopters.
It wants to build a critical mass of engineering talent on the Yorkshire Coast, and move to larger premises within the next two years.
If Unison continues to expand at its present rate, it may have to double the workforce within the next two years.
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Hide AdYou really wouldn’t think that Unison and Discovery Store were operating in the same economic climate.
But Unison’s success is being driven by wider economic trends. As Alan Pickering, Unison’s managing director, was quick to highlight, the United States economy’s performance has beaten expectations in recent months.
It’s no surprise that some of the firm’s biggest orders have come from US clients, and firms based in countries that have been relatively untouched by the global crisis, such as Brazil.
So when people ask me about their economic prospects, I find it impossible to answer the question without asking who they work for.
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Hide AdFor smart engineering firms like Unison, the future is rosy.
But will the success of these exporters lift Britain’s economy out of the mire? Although many globally-focused engineering and manufacturing firms are firing on all cylinders, I fear this won’t save us from a double dip.
Much of the optimists’ focus has been on the latest economic data from across the Atlantic.
The US unemployment rate fell to 8.3 per cent last month, its lowest figure for three years.
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Hide AdHowever Federal Reserve Chairman Ben Bernanke has reiterated his plans to hold US interest rates at record lows until late 2014 – a sign that the world’s biggest economy is certainly not out of the woods yet.
In a speech last week, Mr Bernanke highlighted the fact that the depressed US housing market was still acting as serious drag on economic recovery.
It would be the height of folly to believe that a sustained US recovery was in the bag.
I’m certainly not convinced that the Greek parliament’s decision to approve austerity measures will lead to a period of European stability.
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Hide AdWhen it comes to the Greek crisis, the pessimists have always been right.
Closer to home, the full impact of the public sector job cuts has still to be felt. We should be very worried about the number of people who have become economically inactive.
According to the TUC, unemployment could be as high as 6.3 million in the UK. The TUC arrived at the figure using an American measure, which includes people who are in part-time jobs because they cannot find full-time work. It’s a brutal fact that many more companies will be destroyed this year by a toxic mix of weak consumer sentiment and global instability.