Belfast Telegraph

Currency fears among factors that have left manufacturing in a brittle state, says industry spokesman

By Margaret Canning and PA

Manufacturing in Northern Ireland is in a "brittle" state, with currency concerns among the many pressures facing the sector, it has been claimed.

Stephen Kelly, the chief of lobby group Manufacturing NI, spoke as figures from the Office for National Statistics (ONS) showed that UK manufacturing output slumped in October.

Output was down 0.4% in the month, against expectations for it to stagnate, and in contrast with a 0.9% increase in September.

The ONS said activity in the sector was also down on an annual basis, falling by 0.1%.

The figures come after manufacturing industry group EEF said on Monday that manufacturers were enduring a "difficult end" to a tough year amid mounting gloom over the global economy.

Manufacturing in Northern Ireland has also endured a year of mixed fortunes - capped by the announcement last month of the closure of the Michelin tyre factory in Ballymena with the loss of nearly 900 jobs.

Bombardier, the province's biggest manufacturer, has also endured uncertainty over its ambitious CSeries project, which has performed below expectations as it attempts to break into a market dominated by Airbus and Boeing.

Mr Kelly said he believed manufacturing in Northern Ireland was "brittle," particularly for exporters, who were struggling with currency pressures beyond their control.

"Our sense is that local manufacturing remains brittle, with pressures on pricing for exporters in particular under stress from currency, bringing the issue of cost into sharp focus," he added.

"Many have conceded profit in order to retain contracts, but that can't continue to be a strategy which will lead to growth.

"Transportation and shipping costs, increasing labour costs driven by policy areas and the perpetual issue with energy competitiveness are causing stresses.

"A shift in currency values will help, but is outside of local control so we are reliant on growing in our most important markets of Great Britain and Ireland."

Sterling's strength against the euro - €1 is around £0.73 - has left Northern Ireland exporters finding it tougher than ever to compete with businesses in the eurozone.

The most recent Ulster Bank PMI survey for October also saw a fall in manufacturing.

Output from manufacturers in October was flat, according to the bellwether survey - the weakest in seven months.

And new orders in factories were also flat after shrinking in September.

Manufacturing employment in Northern Ireland also fell for the second month in a row during October - the fastest rate of decline since June 2013.

And the most recent Northern Ireland composite economic index for the second quarter showed a fall in industrial production of 1.9% compared to the first quarter. However, that followed an unusually large quarterly rise of 3.8% in the first quarter. The main contributor to the overall increase in the first quarter was a 14% quarterly jump for transport equipment - explaining a fall of 6.2% for that sub-sector during the second quarter.

David Kern, British Chambers of Commerce chief economist, said: "There are still major challenges facing the sector, particularly in the face of worsening global circumstances."

Belfast Telegraph