As a result, firms expect production to fall over the coming quarter, according to the CBI’s latest monthly industrial trends survey.

Of the 434 manufacturers who responded, 18% reported total order books to be above normal, while 41% said that they were below.

The resulting survey balance of -23% is the lowest since October 2010 (-28%).

Export demand also remained depressed with 44% saying export order books were below normal expectations.

In line with weakened order books, manufacturers expect to reduce production over the next three months, the research found.

Ian McCafferty, CBI chief economic adviser, said: “Conditions in the UK manufacturing sector remain difficult, with demand both at home and abroad subdued. The weaker export performance no doubt reflects on-going instability in the Euro area, our biggest export market, and its knock-on impact on prospects for the real economy.

“A clear and orderly resolution to the crisis remains essential to prevent further adverse effects on both UK manufacturing and the wider economy, and to lift business confidence.”

Published with permission of TheBusinessDesk.com

Of 470 manufacturers surveyed, 22% described total orders as above normal, and 31% said they were below. The CBI says the resulting balance of -9% indicates order book levels slipped back in September, though this measure remains well above its long-term average of -18%.

The news comes as Leeds manufacturers report a rush of new business wins and investment, and will be welcomed following the announcement by defence giant BAE that it is to cut nearly 900 jobs at its manufacturing plant in East Yorkshire.

Allied Glass, manufacturer of glass containers for the premium spirits industry including leading brands such as Diageo, Chivas and William Grant & Sons, is investing millions in new machinery and staff as its new management team prepares to conquer new markets in Europe and further afield.

The Leeds-based business went through a secondary management buyout a year ago in a deal valuing the manufacturer at £75m.

Managing director Alan Henderson sees diversification into Europe as “a key part of the growth” of the business, which is backed by the private equity arm of Barclays Bank.

In an interview with the Yorkshire Post, Mr Henderson said that Allied wants to win new work in France, Italy, Spain and Poland: “We are targeting key brands that we want to be associated with and know we can do a good job for,” he said.

Allied has hired 30 people to staff a new facility in Leeds in a £600,000 investment to create a new operation decorating bottles.

Meanwhile, textile manufacturer Hainsworth has won a contract to kit out 2,000 firefighters across the West Midlands’ 39 community fire stations. The company already makes protective fabrics used by firefighters across the UK as well as in the US, Europe and the Middle East.

Now West Midlands Fire Service is to buy Hainsworth’s TITAN kit – a patented double cloth combining flame retardant properties on the face and high strength fabric on the back, resulting in increased thermal protection.

The eight-year contract will see the state-of-the-art kit rolled out to all firefighters in the West Midlands. The uniform, in dark blue and red, replaces the magma coloured uniforms previously worn by the service. The new kit will be manufactured by Bristol Uniforms.

And specialist brewery engineering firm Microdat has followed up a £500,000 equity investment from Finance Yorkshire with news of £5 million worth of orders for its innovative cask and keg handling systems which are being installed in breweries across the UK

The purchase of the two names from Unilever by the Leeds-based business is expected to boost its annual gross sales to around £150m.

It follows the recent acquisition of salad crouton brand La Rochelle and the re-introduction of the Campbell’s soup brand to British supermarket shelves by Symington’s.

Other brands in the Symington’s growing portfolio including Ainsley Harriott, Aunt Bessie’s, Mugshots, James Martin and Golden Wonder.

David Salkeld, chief executive at Symington’s, said: “The Unilever acquisition is a significant step for our business and we are delighted to have completed the deal.

“We have a proven track record of taking on heritage brands, rejuvenating them and introducing new product developments.

Read full story>>>

More than half of exporting-manufacturers are experiencing an increase in overseas sales and orders, according to the survey, and the majority of the sector’s growth is coming from international trade. Service sector exporters reported improvements on the previous quarter’s results, with 36% saying that overseas sales have increased.

With only 23% of service providers selling overseas – compared to 57% of manufacturers – there is concern that the sector’s dependency on a fragile UK market will result in it experiencing slow or stagnant growth. The weak advance orders (+3% net increase) reported by the sector suggest that this weak performance is likely to continue into the next quarter.

Despite the fragile UK market, business confidence remains high. Manufacturers are more optimistic than services with 70% expecting their turnover to increase over the next 12 months compared to 58%, which is associated to the sector’s strong overseas performance.

Manufacturers are also leading the way in terms of job creation with one third increasing their workforce compared to one fifth of service providers.

To read the full report, visit>>> http://www.yourchamber.org.uk/images/stories/pdfs/QESReport_QTR2_2011.pdf

Enterprise zones are a Government initiative to encourage private sector growth by allowing LEPs to choose areas that can enjoy benefits such as reduced business rates and simplified planning rules.

It said that after a detailed analysis of each proposal the Aire Valley Leeds was identified as the most productive option.

According to the LEP, the Aire Valley Leeds can deliver a long term funding stream for the LEP to invest in promoting economic growth, a significant increase in economic output and new jobs, and access to job opportunities across a wide geographic area

The recommendation has been also guided by the Government’s requirement that the enterprise zones should be generally based on ‘clean sites’ with little or no business occupants.

The LEP said the Aire Valley Leeds can deliver £550m of additional economic output and over 9,500 new jobs by 2025, which will be accessible to over 630,000 households in the city region.

Neil McLean, chairman of the Leeds City Region LEP board, said: “The opportunity presented by the Aire Valley enterprise zone is extremely good news for the whole city region and seen by the LEP as a positive first step towards fulfilling its ambition to grow and become a world-leading, dynamic economy.

“Bradford city centre is a clear regeneration priority for the city region and has the LEP’s full support. Next steps include examining which funds and financial mechanisms can best support the delivery of major investments that the Bradford city centre needs.

“We are also supporting Selby’s Regional Growth Fund bid to round twb and we have made a commitment to work with Wakefield to broaden the district’s employment base.”

The LEP board said it feels that the opportunity presented by this funding stream is important for the City Region but needs to be seen as part of a wider range of funding options being explored by the LEP board.

It said: “The work already conducted on the other enterprise zone proposals has identified a range of important issues that the LEP will need to give consideration to in developing its plan, to address its longer term priorities and deliver its ambition.”

The plan will be discussed with businesses and LEPs across the country at a national event organised by the Leeds City Region Partnership on September 9.

The survey shows output and orders balances turned out as strong as expected in the last quarter, marking the sixth consecutive quarter of growth. And following a jump in the number of vacancies in manufacturing in the official figures companies across the country continues to recruit over the past three months. Alongside the positive investment intentions, the survey indicates a further gradual improvement in confidence.

Over the last six months, when the economy as a whole stagnated, manufacturing grew by 2.3%. Since the recovery began, despite only accounting for around 13% of the economy, manufacturing has been responsible for one third of economic growth. Even in the first quarter of 2011, where the industry’s growth rate slowed a little, manufacturing accounted for approximately one quarter of total economic growth.

However, the ability of manufacturers to manage the volatility of input costs is now a greater concern, with signs that fewer companies, particularly in consumer facing sectors, are able to pass on price rises with pressure on profit margins returning.

Read more about the EEF’s Manufactuirng Outlook survey.

The fast growing international company is aiming for its UK operation, based at Sherburn Enterprise Park near Leeds, to grow to a turnover of £10m within two years.

From its Yorkshire base Power Link is looking to establish itself as a European leader in the manufacture and distribution of diesel power generation sets. The business already employs more than 400 people in its Shanghai factory.

Sophie Han, general manager, Power Link Machine UK, said: “This investment in our European operation is a significant step for the business and will enable us to pursue further European and international opportunities.”

The news follows the announcement last month that Mitsubishi Power Systems Europe (MPSE) had acquired a 35,000 sf ft unit at Navigation Park , Leeds, which it will use for its expanded service and parts facility.

Power generation, service and maintenance firm MPSE was established in 2007 and employs more than 500 staff in eight offices across Europe. The company is involved in the design and procurement of gas and steam turbines as well as developing advanced energy generation in both the solar and wind powered sectors.

Juergen Richter, service director in the Leeds centre, said: “The acquisition of this property will assist us in the expansion of our business and enables us to respond effectively to the needs of both our existing and future clients.

“With the ever growing requirement to source more efficient means of power generation MPSE needs to be able to offer our customers innovative alternatives for power generation as well as increased level of service and shorter response time.”

Siemens has also made a £1.2 million investment in its mechanical drives division, opening a new Leeds plant at Navigation Park at the beginning of the year. The move is designed to enable the £15m operation handle additional and bigger contracts, including work to support the group’s planned major offshore wind turbine manufacturing plant in Hull.

While the skills gap and over-regulation present continuing problems for manufacturing companies, management from firms including Mitsubishi Power Systems Europe, Group Rhodes, Thorite, LBBC and Airedale International all said that market conditions are improving and they are focused on taking advantage of growing opportunities.

Leeds Manufacturers: Surviving and Thriving in a Competitive Environment was organised by Leeds Manufacturing in partnership with sponsors Santander Corporate Banking, Clarion Solicitors and Deloitte, who hosted the breakfast at its offices at No 1 City Square in Leeds city centre.

Speakers at the event included Leeds City Council chief executive Tom Riordan, Andy Tuscher from EEF, managing director of LBBC Howard Pickard and Airedale International’s managing director Clive Parkman.

Riordan told manufacturers that they have a bigger role than ever to play in the success of the region, particularly with the launch of the local enterprise partnership.

He said: “We are at the start of a new era in which business and economic growth will be self-starting and business-led. The message from the LEP is to lose the politics and concentrate on jobs and investment.

“Let’s do some myth-busting: manufacturing makes a major contribution to the economy of Leeds and the wider city region and is critically important for the economy going forward.”

>>> Read the full report on Leeds manufacturers: surviving and thriving on The BusinessDesk.com