Page last updated at 12:04 GMT, Wednesday, 18 February 2009

Manufacturing 'needs state funds'

Car assembly worker
There are fears over how the recession will affect manufacturers

The government is being urged to give the same financial support to manufacturing during the recession as it has to failing UK banks.

The Work Foundation think tank wants emergency state funding to help save jobs and companies in the "extremely important" sector of the economy.

Its comments came as a CBI survey showed that factory orders were falling at their fastest rate in 17 years.

The government said it had a "profound commitment" to helping manufacturing.

Important sector

Ian Brinkley, associate director at the Work Foundation, said: "The question needs asking - what are we going to live on in the future?

"Modern manufacturing is once again facing a battering from the recession, but it would be a big mistake just to write the sector off.

We can't afford to let a short-term problem deprive Britain of the skills we will depend on to compete in the world economy in the long term
Derek Simpson, Unite union joint leader

"We need to preserve as much of the industrial base as possible because once it is lost it is near impossible to get back again.

"Despite the mythmaking around the demise of manufacturing, the sector remains extremely important for jobs, exports and GDP."

The report said that UK manufacturing had been transformed in recent years and deserved more support for research and development.

Other recommendations included a short-time working scheme to support firms and job losses in the current recession.

'Key driver'

A spokesman for the Department of Business Enterprise and Regulatory Reform said: "British manufacturing is a key driver of the UK economy.

"It is a source of half our exports, and government recognises and has policies that demonstrate its profound commitment through thick and thin."

TUC general secretary Brendan Barber said the Work Foundation's report was "extremely welcome" as it showed the "importance of manufacturing not just to today's economy but to our post-recession future".

Derek Simpson, joint leader of Unite, said the union was "urging the government to learn the lessons of past failures to support manufacturing and begin a programme of emergency support for strategic industries of which car production is most certainly one".

It wants a 13bn fund set up to "provide interim relief for producers and to cover employment costs during the crisis period".

"We can't afford to let a short-term problem deprive Britain of the skills we will depend on to compete in the world economy in the long term," Mr Simpson said.

'Falling demand'

The CBI said 56% of the manufacturers it surveyed now expected to see orders fall over the next three months, while only 12% expected a rise.

The survey also recorded a balance of -49% of firms reporting export order books below normal, where the balance is the difference between the percentage of manufacturers reporting an increase and those reporting a decrease.

This was worse than the balance of -39% recorded in January.

"The weak pound has made UK exports more competitive, but this advantage has been outweighed by falling global demand," said John Cridland, CBI deputy director general.

The CBI report added that manufacturers are continuing to lower prices in an attempt to win orders.

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