Partner Article

North East manufacturing recovery outstrips other regions

New data from a UK-wide study suggests the North East’s manufacturing sector is recovering stronger than its neighbouring counterparts.

Insolvency trade body R3’s research, compiled from Bureau van Dijk’s ‘Fame’ database, shows just over 20% of manufacturing businesses in the North East and Yorkshire have a higher than normal risk of insolvency - the smallest proportion of any region in England and Wales.

The national average stands at 23%, while manufacturing clusters in London (30%) and the South East (24%) hold the greatest proportion of firms with higher than normal risk of becoming insolvent.

Allan Kelly, who is chair of R3 in the North East and head of the Turnaround & Insolvency team with regional accountancy firm Tait Walker, says: “Even in the teeth of the recession, the North East remained home to hundreds of manufacturers that were trading well, winning new contracts, and sustaining and creating employment, and it’s pleasing to see this traditionally strong sector now leading the way towards sustained recovery.”

The region’s transport and haulage sector is also faring better than most of its rivals around the UK according to R3’s research, with just 23% of firms potentially facing a raised risk of insolvency, compared to a national average of 31% and figures as high as 37% (London and the South East) and 33% (West Midlands) elsewhere.

The North East’s technology and IT sector has the highest proportion (39%) of businesses with a greater than normal risk of becoming insolvent of any regional market sector, although this is only just ahead of the national figure (37%), with restaurant (38%) and pub (36%) businesses next on the list.

Allan Kelly continues: “Given our strong knowledge economy and the successes that this sector has enjoyed over the last decade, it’s perhaps surprising that our research has revealed the potential insolvency dangers facing the North East technology and IT sector, although they aren’t very far out of step with our findings for the rest of the locations we surveyed, so there don’t appear to be any specific issues that are solely inherent to our region.

“While the regional leisure industry has faced real problems over recent years, the beginning of an economic recovery should see an improvement in the fortunes of businesses in this sector as people will have more money in their pockets to spend on going out.

“The best way for struggling companies in any sector to address their financial difficulties is to get advice from a qualified source as soon as problems become apparent. Acting proactively is the most likely route towards addressing and resolving their problems, and getting them back into the right shape for recovery.”

This was posted in Bdaily's Members' News section by Tom Keighley .