Region's manufacturers lagging behind in investment and export

A survey carried out by the EEF over the first quarter of 2010 suggests that manufacturers are dreading a hung Parliament because they believe it could lead to major decisions over energy policy being delayed.

Alan Hall, the regional director of the EEF, said: "Manufacturers feel things are getting better, and enquiry rates are up."

A balance of 6 per cent of 105 companies surveyed in Yorkshire and Humber saw an increase in export orders, compared to a UK increase of 7 per cent, over the past three months.

World trade volumes turned a corner towards the end of last year and UK companies' exposure to overseas markets combined with a weaker sterling exchange rate have led to orders recovering in the first quarter.

However, export balances still remain significantly below pre-recession levels.

Mr Hall said yesterday: "You can't suddenly as a business decide that you are going into export. It's something that takes months and sometimes years to develop. World markets are still weak, so the level of opportunity is not as deep or as broad as it might be."

However, he stressed that many Yorkshire companies were exporting, so he was "cautious about the negative flavour of the result".

The balance of companies cutting jobs continued to moderate in the past three months.

Job losses across the sector rose at the beginning of 2009 following the onset of the recession.

However, job losses have been less than predicted as companies and employees have worked together to minimise cuts and retain skills.

The survey, which is compiled with professional services firm BDO, found that lack of cash flow remained a concern in Yorkshire and the Humber.

Mr Hall said: "One of the biggest factors on the cash flow issue is that as a company starts to respond to any turn-up in activity, it inevitably stretches the business cash-wise... There are more chances of a business failing as we come out of this recession. Some people have suggested to me that a hung Parliament isn't a bad thing, in that you get intelligent political decision making.

"Talking to manufacturers, they really do not want to see a hung Parliament. They think there will be 'rabbits in the headlights' from the politicians, while they try to agree some policy frameworks that are a combination of the various party approaches... That lack of decision-making would be very unwelcome from a Yorkshire manufacturers' point of view."

Mr Hall said that conditions in manufacturing had continued to improve slightly in the first quarter.

He added: "All the intelligence when we talk to companies says there are a high level of enquiries. There are new orders being placed and there is business being won."

He said many firms had adopted short-time working practices during the recession, as an alternative to job cuts.

He added: "We are starting to get reports of pinch-points on skill shortages. That's a peculiar thing to say when you think of the severity of this recession."

Mr Hall said many of the shortages were in high skilled production engineering and design jobs.

"I'm appealing to 16 to 18-year-olds to consider an apprenticeship. There are fabulous opportunities in engineering."

He added: "If we have a period of serious indecision – if that were to be a period of two years – then that will inevitably damage the prospects for manufacturing.

"We need to make strategic decisions as a country around energy provision. Manufacturing is a major energy user so it absolutely depends on that infrastructure being strategically approached, with plans in place, and the power stations and off-shore wind-farms

being built."

Cash flow remainsa concern for companies

Conditions in Yorkshire and the Humber's manufacturing sector have continued to improve slightly in the first quarter of 2010, according to a survey from the EEF, the manufacturers' organisation.

Output and orders have stabilised, and are showing some signs of growth. Export prospects are still improving, with the weak pound giving some help. However, the survey found that Yorkshire and the Humber is still lagging behind the national average.

Lack of cash flow remains a particular concern in Yorkshire and the Humber, according to the EEF. Although job cuts are continuing, they are at a slower pace than the national average.

Overall, confidence across manufacturing for growth remains conservative, with fears of a "double dip" recession. Confidence levels in Yorkshire and the Humber are higher than the national average.

Alan Hall, the regional director, of the EEF, praised the resilience and flexibility of Yorkshire's companies.