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.

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

According to the report, both input and new business increased strongly during the month with new orders growth the fastest since April 2004.

Phil Hawker, area director for Lloyds TSB Commercial in Yorkshire, said: “The Yorkshire and Humber private sector continued to grow strongly in March and the average rate of output growth in the first three months of 2011 was the fastest for any quarter since the fourth quarter of 1999.

“Firms attributed this latest expansion to greater new business volumes, which rose at the strongest pace in almost seven years. And the number of people employed in the region’s private sector grew for the tenth consecutive month.”

But he warned that greater cost burdens might weaken profitability and restrict future activity growth.

The regional figures underline the latest Manufacturing Outlook survey from the manufacturers’ organisation EEF and BDO LLP which credits Britain’s manufacturers with continuing to drive the UK’s economic recovery by taking advantage of export-led demand which shows no signs of abating..

According to the survey, the positive responses on output and orders over the past three months have contributed to the strongest four-quarter period in the survey’s history. As a consequence, investment and recruitment intentions are at record levels.

However, EEF also warns that behind the overall recovery picture, there is growing uncertainty about the location and scale of these capital investment plans which are critical to sustaining growth and competitiveness. The survey shows that caution around the durability of the recovery and the cost of finance, particularly for smaller companies, are also preventing solid demand from translating into a recovery in investment.

Furthermore, in line with other recent evidence, the survey shows more manufacturers have reached the limit of their ability to absorb further cost increase with a balance of 26% of companies increasing their prices over the past three months. With few signs that the acceleration in commodity price increases will slow, the balance expecting to raise prices in the home market in the next three months has increased to 39% with manufacturers also expecting to see a corresponding improvement in margins.

According to Turner, chief economist for HSBC, we’ve got to do something different to what we’ve done in the past which has been far too reliant on consumers and governments who spend too much. He argues that the key to getting out of and staying out of recession is investment and exports and that means prioritising manufacturing. “Get it wrong this time,” he warns, “andwe’ll end up like Portugual buth without the good weather!”

Turner was setting the scene for an ‘Insider’ breakfast briefing on The New Manufacturing Agenda at South Yorkshire’s Advanced Manufacturing Research Centre. Speaking on the eve of the budget, he and fellow panelists Terry Scuoler (EEF), David O’Hara (MTL Group)and Brian McKenzie (Firth Rixon), argued that government has to create the infrastructure and environment for growth. In the absence of huge sums of government money, that means focusing on things like R&D tax credits, investment allowances, pushing the skills agenda and putting a balanced energy policy in place to secure the UK’s long term energy needs.

The push for renewables is understandable and it does represent opportunties, Turner argues, but nuclear  power has got to play a part in the UK’s long term energy strategy. If we don’t get the infrastructure online, we risk power outages in the next few years and the UK being at the mercy of ever rising oil prices. There’s also the danger that UK manufacturers will miss out on the opportunities in the nuclear energy sector. Emissions targets and regulation are creating a market but it would be completley ironic if the UK had to import technologies to meet those targets.

Turners also rails against what he sees as the domination of the education sytem by what he terms the ‘liberal arts mafia’ which values A level English higher than a qualified plumber! The serious point is that technical skills are completley undervalued in the UK while intellectual skills are overvalued. Terry Scuoler, UK chief executive of the Engineering Employers Federation, concurs: “There’s has been a big debate about increases in university tuition fees but that if one outcome is an increase int he proportion of people studying STEM-related courses, that may not be such a bad thing.”

 The EEF forecasts manufacturing growth of 3.7% this year and 3.2% in 2011, driven by the strength of overseas markets.

Finding the right people will also be crucial to long term sustainability of manufacturing. This was reflected in discussion round our table, with many manufacturers now ‘importing’ skills form other parts of the UK but recognising that, ultimately, the ageing workforce profile of the sector makes it essential to open up manufacturing to a new generation.

It’s a problem across the sector as shown by the launch today of the ‘Work Wise’ initiative, which aims to encourage and support young people to take up careers in manufacturing and engineering. The initiative has been backed by 50 South Yorkshire employers who are accutely aware of the need to renew the skills base within industry instead of companies feeding off one another’s skills base.

Given that there nearly twice as many people employed in manufacturing in West Yorkshire than there are in South Yorkshire, the need for an initiative in this kind is even more pressing. Something for the Leeds city region Employment & Skills Board and organisations like the EEF to consider?

• Manufacturers reported 33% growth in export sales and 11% growth in export orders, the largest reported improvements in over two years
• Matched by a 27% increase in sales in the domestic market (the third consecutive quarter of improvement) and a 8% increase in orders (second consecutive quarter of improvement)
• 43% report an increase in profit expectation, most positive figure in over two and a half years
• 44% have increased their workforce and 20% are recruiting

The findings are consistent with the results of the CBI’s latest quarterly Industrial Trends Survey which shows an export-led rise in manufacturing production for the first time in two years: 31% said output rose during the last quarter of 2009, the first time since January 2008, boosted by relative weakness in Sterling and improving global demand.

Engineering Employer’s Federation has also forecast export-led growth of up to 3.4% in manufacturing during 2011, although performance will be uneven across individual sectors. Mechanical equipment, metal products and metals will see strong quarter on quarter growth throughout the year, while transport and automotive will see fall in output as scrappage schemes run out and as a result of cuts in public spending