South East: Region's manufacturers end 2014 on 16-year high, says EEF/BDO survey

Manufacturers in the South East will end the year on a high, with firms reporting output and orders at their highest levels for 16 years, according to the EEF/BDO Q4 Manufacturing Outlook survey.

The survey by accountancy and business advisory firm BDO LLP and manufacturers’ organisation EEF shows that a balance of 67% of local manufacturers have seen growth in both order books and output in the final quarter of 2014.

The hugely positive figures mean the South East is the best performing manufacturing region in the UK.  One driver of growth is the electronics sector, which has some of the strongest sectoral results and has continued to punch above its weight locally.

UK-wide, a buoyant domestic market has helped secure the strongest annual growth rate across the sector this year since 2010.

This continuing growth and optimism among local manufacturers have seen investment levels soar for a net 70% of firms - again the highest level in the UK - indicating they remain confident about their prospects for 2015.

Recruitment intentions have fallen slightly in Q4 2014, but that is not surprising considering the consistently high levels of recruitment seen in the region in the first three quarters.

The one area of caution, however, is in exports.  Geo-political risks, global uncertainty and the weak performance of the eurozone are contributing to poor export orders across the UK.

Kevin Cook, partner and head of manufacturing at BDO in the South East, says: “Ending on such a high comes as welcome news to our regional economy. Manufacturers are set to start the year with strong order books and output forecasts. Importantly, with capital expenditure soaring to 70%, they seem confident of a future worth investing in.

“Companies still face challenges, especially in overseas markets. Working against the headwinds of poor export markets, the strength and resilience of regional manufacturers has shone through again this year.

“What’s exciting is that manufacturers would have even more growth potential if the right support was in place. The chancellor must do his bit in this week’s Autumn Statement to back businesses keen to invest, recruit and move into new markets.”

Jim Davison, South East region director at EEF, says: “2014 has proved to be a strong year for South East manufacturers. As we steam into 2015 it’s going to be a case of ‘steady as she goes’ with firms viewing next year with confidence mixed with a healthy dose of realism.

“There have been some notable areas of strength this year, especially among sectors relying on demand in the home market. The fact companies have continued to recruit throughout the year and have kept investment levels high shows they have a positive view of their prospects ahead.”

UK-wide the sector has performed well during 2014 and is on track to achieve 3.5% growth this year, with a forecast of 2% growth in 2015.

The survey was conducted between October 29 and November 14 with 276 companies responding.