Business

Brexit uncertainty the biggest issue for north's growing manufacturing sector

James Donnelly, corporate partner, Tughans (right), Stephen Kelly, chief executive, Manufacturing NI and Maureen Treacy, Perceptive Insights, launch the latest Manufacturing NI and Tughans manufacturing survey
Gareth McKeown

BREXIT is now the biggest issue facing manufacturers in the north, according to a new industry report.

The latest Manufacturing NI and Tughans 2018 survey has highlighted growing concern within the sector ahead of the UK's official withdrawal from the EU on March 29.

The concern mars otherwise positive figures, with the manufacturing industry demonstrating growth, sustained profits and increased staffing levels.

According to the survey, carried out by Perceptive Insight in December and covering 122 Manufacturing NI members, two-thirds (67 per cent) cited Brexit as the biggest issue for business. This is compared to 56 per cent in May.

Other high priority issues include the cost of doing business, highlighted by 65 per cent of those surveyed and the ongoing political uncertainty in the north (59 per cent).

The figures also show that half of members (50 per cent) fear a negative impact from Brexit, compared to 41 per cent in May. Of those, a third (34 per cent) are wary of a 'large' negative impact, a jump from the 20 per cent recorded last year.

Just 6 per cent see a potential positive outcome from Brexit, compared to 21 per cent a year ago.

One potential negative impact for manufacturers post-Brexit could come through the lack of availability of EU labour, with the proportion of businesses (37 per cent) recording a decrease in migrant workers trebling in seven months, according to the survey.

In preparation for potential Brexit-related disruption the research shows that 16 per cent of members have begun stockpiling to ensure continuity of supply, while 42 per cent have stated plans to do so.

That being said almost half of those surveyed (43 per cent) have not made any preparations ahead of the March withdrawal.

Despite a Brexit cloud hanging over the sector, the manufacturing industry appears in rude health with 89 per cent of businesses describing themselves as profitable in the last 12 months - a slight increase from 81 per cent in May.

Almost three quarters (74 per cent) of manufacturers reported an increase in sales during the same period, compared to 57 per cent in the previous year, while staff numbers also grew at 57 per cent of businesses - an increase on the 45 per cent figure recorded in May.

Four in five of those surveyed described their business as being in a position of growth, with 57 per cent of respondents expecting this to continue in 2019.

The majority of surveyed businesses (89 per cent) said they have been actively recruiting in the past year, but 81 per cent reported difficulty in doing so. One in five (21 per cent) said they turned down potential business opportunities as a result.

Manufacturing NI chief executive, Stephen Kelly believes the latest figures highlight the resilience of the sector in the face of a challenging business environment.

"By nature, business will be positive, seek opportunity and plan for the future. The survey demonstrates this continues to be the case despite some dark economic clouds on the horizon," Mr Kelly said

Reflecting on Brexit, he said the survey shows very few of his members wish to leave the EU without a deal.

"These are people who understand the practicalities of trading in markets at home and abroad. Those who want Brexit to be a success need to start listening to these businesses or face the prospect of job losses in the mouth of May's Council elections," Mr Kelly added.

James Donnelly, corporate partner at Tughans said the figures highlighted a "generally positive mood" in the sector, but noted the recruitment difficulties facing manufacturers as a key area of concern.

"Whilst the sector is doing its best to mitigate against the skills deficit, there is no doubt that a restoration of local government would be of great benefit to address this," he added

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