Industry abandons hope of fall in sterling

Click to follow
The Independent Online

Manufacturers do not expect sterling to fall against the euro and are seeking innovative ways to boost profits in the face of a strong pound, a survey today has found.

Manufacturers do not expect sterling to fall against the euro and are seeking innovative ways to boost profits in the face of a strong pound, a survey today has found.

The recession-hit sector already performs significantly better in export markets than is generally accepted, the Engineering Employers' Federation said.

It found that nine out of 10 of its membership, which include 6,000 companies of all sizes, employing more than 900,000 people, sold some of their output overseas.

The report, Manufacturing in the Market Place, said it was impossible to ignore the impact the weakness of the euro had had on companies' ability to export into one of their biggest markets.

EEF's analysis of official data showed that share of UK exports going to the European Union has shrunk to 57.8 per cent from 60.7 per cent 10 years ago. The most recent trade data showed a marked collapse in sales to nations using the euro over the last six months.

But it went on: "Few of the companies that we interviewed are planning for a rebound in the euro's value. They have therefore focused on other ways of improving competitiveness."

These included boosting investment in order to secure efficiency gains and cost cutting. Official figures last week showed that 170,000 manufacturing jobs have been lost over the last 12 months.

The survey also found little inclination to move their factories abroad despite the huge publicity generated by similar decisions taken by Dyson, the consumer products maker, and Raleigh, the bicycle company.

"We were struck by how few companies had moved production abroad as a short-term response to cost pressures," it said.

Cost issues were important for industries with a large labour but it said cost was not the "whole story". Tariff barriers, transport costs and proximity to key markets were also factors.

The overall message of the report was an appeal to the Government for "concrete support" in form of less bureaucracy and more help for exporters.

This included: speeding up export licensing as current delays can mean lost business; more cash to allow Trade Partners UK and improve services such as exhibitions and trade missions; more focus on cultivating emerging economies such as China and Brazil.

Stephen Radley, EEF chief economist, said: "While companies are fighting hard to hang on to current markets and develop new ones, concrete support from Government can make the difference between winning and losing business."

Comments