Expert says future is looking bright for West Midlands’ manufacturing

Jan. 11, 2011 - PRLog -- A leading economist predicts 2011 will still be a good year for West Midlands manufacturing despite uncertainties surrounding the wider economy.

Professor David Bailey, from the Coventry University Business School, said that 2010 had been a very good year for midlands’ manufacturers compared to 2009, and that while growth will slow down in 2011, manufacturing will still outperform the wider economy.

Professor Bailey said:

“2010 was a good year for midlands manufacturing compared to 2009.  From peak to trough there was a 15% fall in the UK’s manufacturing output. Firms and workers had to find ways to save high skilled jobs through pain-sharing measures like part-time working, wage freezes, overtime cuts and much more. It was a huge effort by all involved, and one barely noticed by the national media.

“From from late 2009 and through 2010 we have seen manufacturing bounce back, albeit from a very low base. By the end of 2010 around a half of the output fall should have been recovered.  Indeed, in some regions, we’ve seen something of a two-speed economy with manufacturing outperforming the wider economy.

But some critical challenges remain, and Professor Bailey said that he would like to see more support from the Government for small businesses and manufacturing as a whole:
“Despite the rhetoric from the government of ‘rebalancing’, they have not supported manufacturing as much as they could have done, and I’m still scratching my head wondering whether the new government actually has an industrial policy that actually adds up to very much.

“In particular, critical areas where manufacturing still needs support are over access for finance (especially for very small firms), the need to better support exports and to diversify our export markets towards the rapidly growing emerging economies such as China, and in training and research and development.

“I think one of the key lessons coming out of the financial crisis is that it is important for the UK to have a more balanced economy. Manufacturing is an essential part of that and can provide high quality well paid jobs.

“Manufacturing exporters need to be encouraged to take more risks in going for new export markets but to do this they need support – along with a financial system that is better geared towards helping them.”

Professor Bailey also wants the Government to look at the situation regarding takeovers of companies and learn from the Kraft takeover of Cadbury:

“We still want companies to invest in the UK and for them to be successful, but ownership does matter. Cadbury should never have been in the situation where it was vulnerable to such a takeover and I believe that the Government needs to look at the rules regarding takeovers.

“This could involve changes to restrict the ability of short-term ‘investors’ to vote in takeover situations, and raising the bar for approval of a takeover to two-thirds or 75% of shareholders rather than 50% as at present.

“Beyond that, there needs to be the reinsertion of a broader public interest test back into UK law, as there used to be before 2002. That would give the government a right to have a say on such takeovers, something which the last government gave up. Lord Mandelson, for example, was powerless to stop the Kraft takeover of Cadbury because of this.

“Overall I think 2011 will see manufacturing continue to perform well as it enters a new year in good shape and will out-perform the broader economy. However, there are some dark clouds on the horizon externally (for example the turbulence in the Eurozone) and the speed at which the Government is cutting the deficit may also dent confidence in the economy.

“And despite noises from some at the Bank of England over the need to raise interest rates at some point, a low interest rate is needed to keep the economy growing, to help manufacturers invest and build capacity, and to keep sterling at a competitive level so that firms can grow exports”.

-Ends-

For further information, contact Professor David Bailey on 07974 98 45 58 or Ali Bushnell, External Press and Media Relations Officer on +44 (0)24 7688 8245

# # #

The External Communications team from Coventry University promotes a wide range of initiatives, services, success stories and other related aspects of Higher Education and the achievements of its staff and students as well as comment pieces from experts.