Wednesday, 23 March 2011

Manufacturing proves that we can be “all in this together”

Another cracking set of manufacturing output numbers yesterday from the CBI, a report on which can be read HERE on the Guardian’s website.

The CBI has reported that the orders balance has jumped to 5% in March from -8% in February, well above expectations of a reading of -6%. Manufacturing firms are expecting to increase output in coming months, with that measure rising to 27% from 23%, the highest level since February 2007.

All of which begs the question, how is manufacturing doing it when another one of my clients more aligned to the current vagaries of the consumer sector says he is feeling a definite slackening in demand?

Previously, I have put this down to a more favourable exchange rate environment which is making UK manufactured goods more competitive than we historically have been, but the CBI figures are beginning to show that there may be more to this than meets the eye. Apparently, the export orders balance fell back 11% to 5% during the period. This is still high by historical standards but does point that there more to this than just exchange rates.

A conversation with a manufacturing client a few weeks ago may offer a clue. He believes that manufacturing’s response to the downturn has been far more flexible than other sectors. Instead of laying people off, short time working, pay freezes and cuts, were used to drive cost out of businesses without, crucially, losing the skills necessary to take advantage of any upturn.

All of this demonstrates a rare maturity from both management and workforce and is truly a case of “we are all in this together”. It is certainly a far cry from the days of Red Robbo when a previous client told me he wasn’t sure if he was in the business of manufacturing or just providing jobs.


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