“The Leeds City Region is one of the most important centres for financial and legal services but it also has one of the biggest manufacturing clusters outside London and manufacturing has a key role to play in rebalancing the economy,” says Insider deputy editor Ben Pindar. “But confidence is shakey, access to finance is tough, while international trade levels and skills remain major issues.”

Jason Whitworth of BDO, which sponsored the event and also publishes the Manufacturing Outlook report in association with EEF, said there were positive signs for the sector, with 11 per cent of manufacturers reporting an increase in output over the last three months.

“The key thing that didn’t come out of the budget was any movement on capital allowances, which are key to getting businesses – and in particular manufacturers – investing.”

“Exporting is still a huge opportunity,” he added, pointing out that while Yorkshire businesses are good at exporting to Europe and Ireland, there is still lots of room for growth in worldwide markets.”

Panelists at the breakfast event agreed that the sector still suffers from serious problems when it comes to public perception.

Optare chief executive Jim Sumner argued that addressing the image question is key to getting the next generation into manufacturing and addressing the industry’s ageing workforce profile. “The investment that other countries are making in education, particularly in engineering, is far in advance of what we are doing in the UK.”

Andy Tuscher, regional director for the EEF, added: “It’s very worrying that large manufacturers are struggling to recruit the right calibre of people. We train people in engineering in the UK but they often don’t stay in manufacturing.”

The problem is certainly about image, but it is also about education, he argued, quoting the example of a large manufacturer based in the North East that struggled to recruit 25 apprentices from a pool of 2,000 applicants. “It’s far too easy to see training and development as a cost rather than an investment,” he said.

It’s a common problem for manufacturers across the UK, observed Gary Jones, chairman of Group Heights and a board member of the Leeds city region LEP: “All the skilled guys are going to be retiring in the next ten years. When it comes to large development projects that require prototyping, R&D or project management expertise, we’re having to pull people in from China and the US.”

Public sector procurement is a key area in which many feel government at all levels can help to support UK manufacturing. For Andy Tuscher, putting pressure on government to use UK suppliers for large scale projects such as high speed rail, is essential to protect supply chains and generate employment.

But he recognised that UK manufacturers also need to up their game and, where necessary work collaboratively, to upskill and upscale to compete for business and win contracts.

Jim Sumner pointed to the US and other countries, which apply a domestic content rule to public procurement, forcing overseas suppliers to set up operations and create employment there. He warned that procurement policy which goes for short term benefits rather than looking at long term implications, results in the ‘hollowing out’ of supply chains and skills.

“You cannot leave manufacturing strategy and industrial policy to the free market because nobody else does,” he said, adding that local supply chains can actually be a key source of competitive advantage, allowing manufacturers to respond quickly to changes in the economic environment.

But he counselled that manufacturers need to be alive to the opportunities presented by overseas markets: “Export remains key. British goods are prised in other parts of the world and we have a great deal to offer, although we probably don’t do a great job of leveraging this.”

“There are phenomenal opportunities in place such as India and other EU countries are exporting far more than we are, without the legacy and linkages we have with that country.”

The former Minister of Trade and Industry was speaking at an event in Wakefield, organised by UKTI and  looking at export growth opportunities for companies in the advanced engineering sector.

Manufacturing accounts for 40 per cent of the region’s exports, he told the audience, but he fully supports the drive from government to increase the number of exporters from one in five to one in four businesses.

But he said it was vital to focus on earning rather than spending; “Wealth creators are the most important people – without them there would be no tax and no spending,” he said, arguing that business and wealth creation has to be put above party politics.

Pulling no punches, he took his audience on a whirlwind tour of the developing economies and highlighted the remorseless appetite and aspiration to improve living standards for future generations. “In Shanghai – that’s in Communist China, let me remind you – there is a greater proportion of the economy in the private sector that in any of our major cities.”

As China develops, it will shift manufacturing activity away from the developed cities on its eastern seafront and fill the vacuum this creates with what’s currently being done in the UK, Germany and France.

India and Brasil are no different he argued, recounting the story of taking a ride in a taxi driven by a guy from Chennai. The driver told how he send his wages home to pay for his son’s education. “And what’s he going to do?” asked Lord Digby Jones. “He’s going to sit where you’re sitting when he grow up, not where I’m sitting,” the taxi driver replied.

The challenge is to make the threat presented by developing countries into an opportunity. Brasil, he pointed out, is growing at 7-8 per cent per annum, has a massive internal population to drive demand and an infrastructure investment programme to match it.

Others have already spotted the opportunity: “In Sao Paulo,” he said, “there are more individual German businesses than in any individual city in Germany.”

Unless things change, he warned that Europe is set for staggered, measured decline. “We need to bring everyone up to the highest common denominator, rather than dumming everyone down to the lowest common denominator.”

The UK has the most flexible labour market in Europe and, he argues that Europe needs to combine this with the best of what they do in France – “investing in skills” – and the best of what they do in Germany – “investing in infrastructure” – if it is to stand any chance of competing.

Speaking on the day of the Budget, he said that government of whatever political persuasion has to stop acting as if business is the enemy and begin formulating policy that helps business create wealth and create employment.

Putting forward a three point plan, he called for an urgent review of government procurement policy, which needs to focus on best value rather than price, an end to employer’s national insurance which he described as a “tax on jobs” and for the scrapping of income tax on the national minimum wage to boost both aspiration and demand.

The bagel and coffee shop chain is also set to rebrand its existing outlets as its new management team starts to put its plans into action.

Bagel Nash was bought from itsfounders Uri and Karen Mizrahi last year by Andy Micklethwaite and Sara Hildreth in a deal backed by YFM Equity Partners.

The company has revealed its plans for the future as it celebrates the 25th anniversary of the first shop in Moortown, Leeds.

Ms Hildreth, now retail operations director at Bagel Nash, said:”Our bakers have proudly been baking what we think are the best bagels in the world for a quarter of a century. 2012 is a big year for the business as we re-launch our brand and roll-out our expansion plans across the North of England.

Bagel Nash already operates 11 stores in Leeds, Huddersfield, York and Manchester and wants to grow that to 50 in the next five years, focusing largely on the North of England.

The company also has plans to develop its wholesale bakery business that produces 40,000 bagels a day and exports 4m every year.

It currently employs 110 people and hopes that will treble.

End

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 survey shows that almost half of companies have redesigned products or processes in response to rising materials prices and 40% admitted to substituting some inputs with cheaper alternatives. Nearly two-thirds of companies have sought different sourcing options with just over 4 in 10 looking to renegotiate existing contracts with customers.

EEF director for Yorkshire and Humber Andy Tuscher said: “This is a stark illustration of the impact of high material costs which manufacturers have been grappling with throughout the recovery. However, whilst most attention is focused on the inflationary aspects of these costs, the flipside is another story of the extent to which companies are finding innovative solutions to deal with them.

“What is clear from our survey is that there is not a simple equation for managing rising and volatile materials costs. Manufacturers have so far deftly navigated the issue using the internal tools available and being agile in managing customer relations and procurement strategies. And this is an issue that companies are saying they will be keeping a close eye on in the months ahead.”

The survey suggests that commodity prices are likely to remain volatile and that most manufacturers will be forced to build further price increases into their business plans.

Read the full survey here >>

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