Blog from Jason Whitworth, partner and manufacturing expert based at BDO in Leeds

There’s no denying the region’s manufacturing businesses have had a tough time, but we are starting to see Yorkshire’s resilient nature pay off, as more companies report signs of improving demand and are looking to the future with greater confidence about prospects for recovery.

We have seen a larger than expected improvement in output and orders since the start of the year and Yorkshire’s manufacturing companies are starting to feel more confident and upbeat since the financial crisis began in mid-2007.

A number of risks to manufacturers’ prospects still remain and should not be overlooked. Not least uncertainty about how to repair the public finances, ongoing access to finance issues and the sustainability of recovery in export markets. As a result, I would expect to see investment intentions remain muted for a while to come.

Yorkshire manufacturers look to be making impressive gains in exports and it is hoped that the weakness of the pound enables further inroads to be made. In the short to medium term it is difficult to see significant growth in the developed nations of Europe, so as the new economic world order changes, manufacturers need to focus efforts towards high growth emerging markets.

We all need to remain vigilant of the environment in which we are operating, continuing to monitor the health of all major customers, identifying and acting if aged debts begin to mount, and reviewing the security of our supply chain. We also need to be thinking long-term in preparation for competition from a number of countries that will become economic powerhouses over the coming five years.

In terms of the recovery, manufacturers are considerably better placed to bounce back than other sectors that are more reliant on consumer spending to fuel their recovery. While I welcome George Osborne’s plan to protect manufacturers under a new corporation tax framework, there needs to be a clear strategy that rebalances the economy and encourages exporting. This means removing red tape, providing specific support to mid-market manufacturers and supporting emerging technologies, whilst not forgetting the UK’s traditional industrial base.

Manufacturing currently represents around 12 per cent of UK GDP. We need to get back to producing things and personally I would like to see manufacturing push it’s way back up towards 20 per cent of GDP with the right investment and support from the government. In the region, the manufacturing sector is 11 per cent of the total output per year, so any recovery in this sector will be a welcome positive sign that the economy is rebalancing.

Tags: BDO, Future of UK Manufacturing, Guest Blogger

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