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UK manufacturing hit hard in 2009: administrations up 12% on 2008
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21/01/2010
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Total administrations in the UK manufacturing sector for 2009 were up 12% from the previous year although the rate of failure is beginning to ease, according to new data released today (21 January).
According to the business advisory firm, Deloitte, the manufacturing sector was the second hardest hit industry representing 17% of total administrations in 2009, following the property and construction sector which accounted for 20% of total administrations. The recruitment and business services sector was the third most affected industry, representing 16%.
However the rate of administrations eased off toward the end of the year, with the numbers for the last three months of the year falling 32% on the previous quarter – from 128 in the third quarter to 87 in the fourth.
Ross James, manufacturing partner at Deloitte, said it came as no surprise that 2009 was a bad year for manufacturing administrations and 2010 would also be challenging. "There are however pockets of optimism across certain industry areas such as high-tech specialised manufacturing," he went on.
"Fundamentally a manufacturing recovery will centre around demand. While the low value of sterling is certainly a factor when it comes to boosting the UK's exports, there must firstly be a sustained recovery in demand.
"Recent consumer spending data has been quite upbeat. Hopefully this positive sentiment will filter through to the manufacturing sector and orders will increase. This would also help manufacturers of machinery and tooling, who have been badly hit in the last year or so by other manufacturers cutting capital expenditure.
"At this stage it is difficult to predict whether the total number of manufacturing administrations will increase in 2010. Primarily it centres on whether there is a sustained recovery in demand. All eyes remain focused on whether there will be a double dip in the economic growth – if so it is inevitable that there will be more manufacturers forced into administration. However, hopefully we will see the return of confidence and a sustainable increase in demand so it doesn't come to that."
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Author
Ken Hurst
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