Whilst other regions in the UK have seen a sharp decline in manufacturing over recent years, the North East has managed to maintain a greater percentage of its companies in this sector, whether this is a positive or negative fact remains open to debate.
The rise of new low cost manufacturing bases in Asia, South America and Eastern Europe has placed increased pressure on regional manufacturers who previously held a cost advantage over others in the market. Cost issues have also prompted companies to outsource the low-tech elements of their production to low-cost bases in developing economies, leading to job losses and lost GVA in the sector. As a result of these trends the future for the North East now appears to be in high, value added manufacturing where technical competencies can be applied to create differentiated products capable of competing the world over.
The sector remains important for the region, despite its national decline, particularly if the North East wishes to maintain its strong export sector. Manufacturing is also essential in promoting private sector R&D in the North East, an area where the region has performed poorly in the past.
With this in mind, it is vital that the region positions itself to compete in this marketplace by insuring that the correct skills and resources are available. Workforces must become more flexible in order to meet the constantly changing demands of global consumers
• Manufacturing accounts for around 13% of national employment and 15% of employment in the North East; this represents around 140,000 workers.
• The sector is responsible for 21% of regional GVA and 16% of national GVA.
• China and India employ 90m (12.5%) and 77m (19%) workers in the sector respectively.
• By 2012 it is predicted that manufacturing will account for only 13% of total employment in the region.
• Despite the decline of the industries influence, the gap between service and manufacturing investment intentions have remained similar.