Manufacturing administrations up 33%

Administrations in the manufacturing sector have increased by 33% in the first nine months of 2009 compared with the same period last year according to analysis by Deloitte, the business advisory firm.

The manufacturing sector saw the largest increase in administrations in the third quarter of 2009 compared with the same quarter last year, followed by the wholesale and distribution (34%) and financial services (17%) sectors.

Paul Williamson, North East manufacturing partner at Deloitte, said: “The fact that there has been an increase in manufacturing administrations year-on-year is not surprising given the economic climate, however, the rate at which they have increased illustrates the fact that the sector is really suffering at the moment.

“The key issue is that demand is not yet returning. Currently we are in a position where customers seem to be playing it safe and not placing big orders.

“Further, at a time when the weak pound is benefiting some exporters, manufacturers who are reliant on imports are struggling as the cost of their raw materials increases.”

Neil Matthews, reorganisation services director at Deloitte in Newcastle, said: “The combined effect of less demand for goods – compounded by consumers reining in spending, businesses cutting back on orders as a result, the weak pound, and an increasingly competitive global market means that whilst there may be elements of reprieve across some sectors, this isn’t yet the case for the economy as a whole.”

Paul Williamson added: “Whilst there are some positive signs elsewhere in the economy, the timing around a manufacturing recovery remains very uncertain. Industry needs confidence to return, and businesses to start investing again, so that a recovery in demand feeds into new orders and enables manufacturers to kick-start production.”

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