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| Factory downturn 'accelerating' | Factory downturn 'accelerating' |
| (about 3 hours later) | |
| The downturn in UK manufacturing has accelerated and could lead to 140,000 job cuts in the sector this year, according to a survey. | |
| Engineering and manufacturing body the EEF, which surveyed 782 firms, said production and orders had hit record lows in the first two months of 2009. | Engineering and manufacturing body the EEF, which surveyed 782 firms, said production and orders had hit record lows in the first two months of 2009. |
| The group forecast that manufacturing output will fall by 8.6% in 2009, with a growth of just 0.2% in 2010. | |
| It said there was "simply no hiding the fact these figures make grim reading". | It said there was "simply no hiding the fact these figures make grim reading". |
| However, a separate survey of 11,000 firms by BDO Stoy Hayward reports a slight rise in short- and mid-term confidence as many accept the realities of the recession. Few firms expect things to get better in the near future but they are also focusing on making sure they are ready to take advantage of the eventual recovery Steve Radley, EEF chief economist Firms 'adapting to recession' | However, a separate survey of 11,000 firms by BDO Stoy Hayward reports a slight rise in short- and mid-term confidence as many accept the realities of the recession. Few firms expect things to get better in the near future but they are also focusing on making sure they are ready to take advantage of the eventual recovery Steve Radley, EEF chief economist Firms 'adapting to recession' |
| BDO Stoy Hayward said the growth in optimism suggested action was being taken to adapt to the economic climate, although it predicted that 320,000 more jobs would go across the UK in the next three months alone as firms cut back. | |
| Peter Hemington, a partner at the firm, said: "Companies are now adapting their business models for an uncertain future." | Peter Hemington, a partner at the firm, said: "Companies are now adapting their business models for an uncertain future." |
| The EEF's chief economist, Steve Radley, said demand from both domestic and international markets had shown steep declines, making the past three months "extremely difficult for manufacturers". | The EEF's chief economist, Steve Radley, said demand from both domestic and international markets had shown steep declines, making the past three months "extremely difficult for manufacturers". |
| "Few firms expect things to get better in the near future but they are also focusing on making sure they are ready to take advantage of the eventual recovery," he said. | "Few firms expect things to get better in the near future but they are also focusing on making sure they are ready to take advantage of the eventual recovery," he said. |
| As well as a decline in manufacturing output, engineering output is set to shrink by 10.9% this year and rise by 0.9% next year, it added. | |
| Cars parked | Cars parked |
| Of the firms surveyed, 39% more said output had fallen than those who said it had risen or remained unchanged (a balance of -39%), and 54% more said that orders had dropped. | Of the firms surveyed, 39% more said output had fallen than those who said it had risen or remained unchanged (a balance of -39%), and 54% more said that orders had dropped. |
| And the picture was bleaker in some regions, with firms in the West Midlands posting the weakest balance of output, at -63%, from -31% in the final three months of 2009. | And the picture was bleaker in some regions, with firms in the West Midlands posting the weakest balance of output, at -63%, from -31% in the final three months of 2009. |
| The continuing decline was linked heavily to the weakening auto industry, the EEF said. | The continuing decline was linked heavily to the weakening auto industry, the EEF said. |
| The East Midlands and Eastern England also reported sharp falls in production levels. | The East Midlands and Eastern England also reported sharp falls in production levels. |
| The EEF said that firms in the motor vehicle sector had seen their output and orders balances fall to -91% and -81% respectively. | The EEF said that firms in the motor vehicle sector had seen their output and orders balances fall to -91% and -81% respectively. |
| The recession has slowed demand for new vehicles as consumers look to rein in big ticket purchases - prompting some factories to shorten their working week or to enforce a temporary shutdown. | The recession has slowed demand for new vehicles as consumers look to rein in big ticket purchases - prompting some factories to shorten their working week or to enforce a temporary shutdown. |
| This has had a knock-on effect with firms in the metal sector who supply car makers, the EEF said. | This has had a knock-on effect with firms in the metal sector who supply car makers, the EEF said. |
| The findings chime with a separate survey by PricewaterhouseCoopers which said that the metal products sector was the sector most likely to suffer in the recession. | The findings chime with a separate survey by PricewaterhouseCoopers which said that the metal products sector was the sector most likely to suffer in the recession. |
| Financial services and the hotels and restaurants sector were also suffering and set for tricky times, said the PwC report, which added that the pharmaceuticals, food retailing and utilities sectors were the least vulnerable. | Financial services and the hotels and restaurants sector were also suffering and set for tricky times, said the PwC report, which added that the pharmaceuticals, food retailing and utilities sectors were the least vulnerable. |
| Job prospects | Job prospects |
| The EEF said that "as might be expected", the economic slowdown was having a marked effect on companies' plans for investment and employment. | The EEF said that "as might be expected", the economic slowdown was having a marked effect on companies' plans for investment and employment. |
| Its study found that 37% more firms were likely to have a smaller workforce than larger or unchanged staff levels. | Its study found that 37% more firms were likely to have a smaller workforce than larger or unchanged staff levels. |
| Meanwhile 45% more intended to cut back on investment than to hold steady or step-up how much they put into the business. | Meanwhile 45% more intended to cut back on investment than to hold steady or step-up how much they put into the business. |
| Mr Radley said the government should "consider all possible avenues to help companies deliver alternatives to redundancy", supporting firms to hang on to skilled workers they will need when the upturn begins. | Mr Radley said the government should "consider all possible avenues to help companies deliver alternatives to redundancy", supporting firms to hang on to skilled workers they will need when the upturn begins. |