Home News North-south divergence in manufacturing performance growing, says survey

North-south divergence in manufacturing performance growing, says survey

A North/South divide in manufacturing industry performance is continuing to grow, according to the latest survey from employers’ organisation Make UK and business advisory firm BDO.

The Regional Manufacturing Outlook survey for the fourth quarter of 2019 found that in London and the South  East far outstripped any other UK region on five out of six indicators. Meanwhile the West Midlands in particular suffered from problems in the automotive sector.

The average balance for total orders across the UK (the number of companies reporting an increase minus those reporting a decrease) was +6% whereas in London and the South East it was +21%. The difference was even more stark for domestic orders (+30% compared to a national average of -5%) and for export orders (+39% compared to +10%). Intentions to recruit by London and South East manufacturers showed a balance of +26% compared to a national average of +6%.

London and the South East is already the second largest manufacturing region in the UK, just behind the North West, employing over 400,000 people and worth £28.1bn annually. It is benefitting from the global growth in investment in new technologies linked to the fourth industrial revolution such as robotics and artificial intelligence, a pattern which is expected to increase.

By contrast, the survey shows that the West Midlands is suffering acutely from the problems in the automotive sector, with all six of the survey indicators in negative territory. The balances in total orders and output showed the biggest declines in the UK in the final quarter of the year, while the region’s balance for UK orders was also the worst across the UK.

Balances for investment intentions were negative in the North East, North West and the East and West Midlands, which has important implications for the long-term performance of industry in those regions. The only positive picture for investment intentions in the northern half of the country was in Yorkshire and the Humber.

Seamus Nevin

Make UK chief economist, Seamus Nevin, said: “There is now a clear two-speed economy in manufacturing performance with London and the South East at full speed while some other regions are stuck in first or second gear. Though there are a number of global factors impacting on the performance of some regions, industry will support the new government in any drive to boost growth and investment across all UK regions.”

The survey indicators are output, UK orders, export orders, total orders, employment and investment. The survey covered 339 companies between 30 October to 20 November.