Tom Lawton, Partner and Head, BDO Manufacturing looks at the findings from the annual Regional Manufacturing Outlook report – in partnership with the EEF – which pulls together our survey results on the health of manufacturing over the past 12 months, comparing performance across the eight regions of England, Scotland and Wales.
The past year has seen the restoration of confidence across all UK regions after the wobble in the immediate aftermath of the Brexit vote, with most regions posting positive news – particularly in the last three quarters.
A number of tailwinds have emerged to support confidence among manufacturers over the last 12 months. In particular, the unwinding of the drag of low commodity prices, as well as the synchronised pick-up in global manufacturing, have combined to rejuvenate demand in the sector. Nevertheless, uncertainty continues to dominate the economic and political landscape and as a result, confidence in some regions continues to ebb below pre-Referendum highs.
In the latest report, we see the two Midlands regions as top performers when it comes to the strength of improvement in output over the previous four quarters. That said no part of the country is left behind when it comes to new order in-take over the past year as all regions covered have reported positive balances. This is translating, inevitably, into the need for more people.
The East of England, North West and Yorkshire and Humber look to be the region’s most affected by uncertainty, posting negative balances for investment over the past four quarters, despite strong demand and output readings. On the other hand, the North East is pushing forward with investment despite recording the lowest balance on orders.
There are a number of notable shifts from last year’s Regional Outlook report. The South East and London lost its crown as the best performing region after for two consecutive years, with the West Midlands moving in to claim the prize. And, Wales has gone from the most improved region in 2016 to the least, while last year’s bottom performer, the North West, has seen the heftiest improvement in 2017.
There are many reasons to be positive about how manufacturing is faring right across the country, however to ensure the sectors continued growth, we need the Government to deliver a long-term, practical Industrial Strategy for the UK and the Regions – with a focus on the mid-market manufacturers and investing in education, skills and in the regional infrastructure. From better roads, rail links to reliable broadband connections and support for Industry 4.0, the Government needs to help create the right environment for manufacturers’ to continue to be successful in what will undoubtedly be challenging times in the short and medium term.
Download the full report for more in-depth information about each region and how it compares to others in productivity, business creation and employment dynamics.
Tom Lawton is Partner and National Head of Manufacturing at BDO.