Make UK/BDO report shows the impact of COVID-19 on key sectors.
A new report recently released from Make UK, the manufacturers’ organisation ,and accountancy and business advisory firm BDO LLP shows that manufacturing remains central to the success of the West Midlands with the sector accounting for 16% of the region’s economy, way above the national average.
The report also shows the continued reliance of the West Midlands on the EU market for exports. As a result, Make UK has stressed the vital need to secure a trade deal with the EU before the end of the year that avoids trade barriers. Failure to secure such a deal risks significant damage to prospects for industry in the West Midlands.
According to the report, which analyses the overall status of industry in the region over the last twelve months, the West Midlands has endured a tumultuous year. The downturn in global markets and the automotive sector in particular was already severely impacting the sector even before the Covid pandemic hit.
As well as impacting on both output and orders for the last year, it has affected recruitment and investment as companies in the region have prioritised short term hiring.
Transport Equipment remains the overwhelmingly dominant sector in the region accounting for a third of output which is worth over £7bn to the West Midlands economy. The extent of the exposure to the Automotive industry and its supply chain is highlighted by the impact the downturn in this sector has had on the region overall. Metal Products and Mechanical Equipment are the second and third largest sectors respectively.
The West Midlands also continues to be a strong export performer, accounting for almost 10% of total UK manufacturing exports. The EU is the region’s main export destination (44%) followed by North America which accounts for a quarter of exports, significantly above any other UK Region. This is followed by Asia which accounts for 16% of exports.
Commenting, Charlotte Horobin Region Director for Make UK in the Midlands, said: “The report shows that industry continues to have a central role to play in the success of the West Midlands economy.
“There are well documented challenges going forward, not least the major impact of Covid 19 and the global economic downturn, the results of which are likely to be felt for some time. Furthermore, the outcome of Brexit and US Trade Talks have the potential to have an impact on the future performance of manufacturers in the West Midlands given the exposure to both markets. If we are to avoid a double whammy hit on the sector it is essential that the UK agrees a trade deal in particular before the end of the year that prevents barriers to trade and avoids tariffs on the Automotive sector.”
Jon Gilpin, Head of Manufacturing at BDO in the Midlands added: “The region’s manufacturers were already facing huge uncertainty over the UK’s future trading relationships, even before the seismic shock of Covid-19. Many have stepped up to support the country at a time of crisis. But they now urgently require the Government to deliver a trade deal with the EU that protects their interests and allows them to plan – in addition to a longer term recovery package which encourages investment in skills, digital transformation and a greener future.
“As the furlough scheme begins to wind down, many of the region’s manufacturers will face difficult decisions on jobs and investment, so it’s vital that their pleas for support are heard loud and clear by policymakers both locally and nationally.”