Slowdown speeds up

Around 140,000 jobs will be lost in the engineering and manufacturing industry this year, according to the latest survey by the Engineering Employers Federation (

).

The manufacturers’ organisation sharply revised its economic forecast following responses from 782 companies that revealed the extent of the financial crisis in the industry.

Publishing its first quarter survey, EEF reported that the pace of downturn had accelerated in the first two months of 2009 with the trend set to continue through to 2010.

Output fell by 39 per cent and orders by 54 per cent as the weakening demand effected domestic and export orders.

Employment balance in the first quarter of 2009 fell to 37 per cent, down from -13 per cent in the fourth quarter of 2008. Investment plans have also been reduced with 45 per cent of companies reporting that they will scale back in the coming year.

EEF chief economist, Steve Radley, said: ‘There is simply no hiding the fact these figures make grim reading. The past three months have been extremely difficult for manufacturers, with markets at home and abroad showing severe declines. However, while few firms expect things to get better in the near future they are also focusing on making sure they are ready to take advantage of the eventual recovery.’

The EEF’s survey suggests that the economic crisis has hit car manufacturers the hardest with output down by 91 per cent and orders falling to 89 per cent.

At the heart of the motor industry, the West Midlands reported the weakest output and order balance in the UK, down by 63 per cent and 69 per cent respectively.

Optimism among manufacturing firms has also fallen with forward-looking output at 41 per cent and order forecasts down by 42 per cent. As a result, the EEF has downgraded its economic forecasts with manufacturing output falling this year by 8.6 per cent with only a pick up of 0.2 per cent in the next year.

Output in engineering is expected to decline by 10.9 per cent in 2009 and by 0.9 per cent in 2010.

Radley added: ‘The priority for government remains getting credit flowing again and helping companies to invest. In addition, there is now an urgent need to support companies in hanging on to the skilled workers they will need for when the upturn comes. Government must now consider all possible avenues to help companies deliver alternatives to redundancy.

‘The debate on interest rates is now largely academic given how low they are already and the limited potential for further cuts to have any effect. Business is now looking to the government and the Bank of England to ensure that well-run firms are able to access the credit they need to run their operations.’