Industrial sector digs its heels in for a rough ride in 2010
It has been well documented that the manufacturing sector has taken a beating over the past two years as recession tightened its grip on the world economy.
While the weak pound should have been boosting exports of products made in Northern Ireland the global recession also drained demand for the goods that many local firms produce.
The gloomy outlook was confirmed in the March 2010 unemployment figures which showed that the province’s manufacturing sector has experienced more than 10,000 job losses since the industry’s peak in the second quarter of 2007.
This 12.5% fall compares with an 11% decline in the UK over the same period, and illustrates the difficulties faced.
One of the year’s highest profile casualties was the Hughes Christensen drillbit factory in east Belfast after the company shifted production back to its headquarters in Texas, making 210 staff redundant.
Bryan Gray, head of Northern Ireland Manufacturing (NIM), which represents more than 400 companies, believes that calls to create conditions in which local manufacturers could get back on an even keel and then begin to thrive are falling on deaf ears.
NIM had lobbied to have a rates break for manufacturers extended into 2010 and has expressed anger at a spike in electricity costs that it said makes Northern Ireland uncompetitive when compared to other locations.
“The things that are of greatest concern to manufacturers are the level of local taxation they are paying — mainly through sewage charges that were introduced in the last two years — and the ongoing differential in energy prices between here and elsewhere in Europe, which has a direct impact on competitiveness,” he said.
Mr Gray noted that our manufacturers are already fighting the cost of peripherality — getting raw materials across the Irish sea and getting finished products back across the Irish Sea.
“Local taxation, energy costs, peripherality would all add to the cost of doing business in Northern Ireland. That cost is likely to have a major impact on foreign direct investment (FDI), which was evident with the closure of Hughes Christensen, which kept production elsewhere in the world.”
Mr Gray said it now appears obvious that the recession is going to be longer and deeper in Northern Ireland than the rest of the UK.
“I think given that a lot of our manufacturers who export would be exporting to the South the state of the Southern economy has a major impact, particularly in construction products,” he said.
“The longer the recession continues the more we see our skills base eroded and we start to lose key skills.”
And yet amid the gloom there are signs that some of the region’s manufacturers are looking stronger for the future.
US-owned FG Wilson, which shed hundreds of jobs in 2009, has said it has seen orders stabilise, while Ballymena-based Wrightbus has secured new orders from Asia and announced plans to invest heavily in research and development.
Aerospace firm Bombardier’s CSeries project is also gathering pace, with full production of the wings for its new plane set to hit full production by 2012 and disk drive maker Seagate announced 85 new jobs following two years of reducing its workforce.
And while many small and medium sized manufacturers have gone to the wall, others have survived.
Last month Fermanagh’s Steel Solutions stepped in to buy Redrock Engineering saving 28 jobs and revealing plans for expansion.
For now these positives are outweighed by negatives.
It seems clear that the remainder of 2010 will continue to be tough going for many firms in the industrial sector.