Last year was a tough one for manufacturers. After a big step forward industry was beaten back in 2015 by a combination of global and other economic factors. Such was the impact that by the end of the year we had revised down our growth forecasts to a contraction of 0.1 per cent for 2015 and a slight recovery of 0.8 per cent in 2016.
Closer to home, manufacturers in this region endured a difficult year end. Output and orders weakened and year-ahead investment plans took a tumble. But, employment intentions were still positive and, overall, manufacturers in our region were looking in better shape than those in some other parts of the UK.
Looking at 2016, early indications are that we face more of the same, with the global picture expected to remain fairly unchanged or potentially even slightly worse.
Risks are expected to become more prominent, but manufacturers are a tough and resourceful bunch. While fully aware that the year ahead will be tough, companies are still eyeing up growth opportunities. Their main focus will be on investing in technology and innovation, finding and selling into new export markets and working closely with customers and suppliers to ensure supply chain flexibility.
Innovation will also drive diversification. We are already seeing oil and gas supply chain companies looking to diversify into other sectors – it’s only reasonable to expect that companies in the metals sector will look to follow suit.
But at the same time, there will also be a little more caution.
The recent Government bombshell about the withdrawal of Carbon Capture and Storage funding sent up a warning flare, particularly to those eyeing up opportunities presented by the UK’s climate change targets. Firms and investors will now be feeling less certain about the risk involved in ‘green’ projects and this could well impact on the direction of their innovation.
But thankfully there are opportunities elsewhere too. While the domestic market is looking considerably less supportive than in recent years, some sectors such as motor vehicles, aerospace and chemicals, are largely bucking this trend.
And, of course, our region’s manufacturers are already prolific exporters – a strength that will stand firms in good stead once world trade and overseas demand pick back up again.
So yes, times are troubled, but Yorkshire’s manufacturers are up for the challenge ahead. Despite the gloomy outlook, confidence in their own business performance is holding up and for me this is key. It tells me they are still a force to be reckoned with and deserve every support as they find new ways to innovate and drive all-important growth.