Suffolk manufacturing is in decline

Challs Warehouse. Picture: Challs

Challs Warehouse. Picture: Challs - Credit: Archant

Although the sun has been shining of late, the mood of manufacturers in Suffolk has been decidedly gloomy, as Brexit uncertainty weighs down on the local exporting economy.

Graham Burchell of Challs. Picture: Challs

Graham Burchell of Challs. Picture: Challs - Credit: Archant

The latest figures from Suffolk Chamber of Commerce’s Quarterly Economic Survey (QES) for the second three months of 2018 reveal that manufacturing businesses across Suffolk are reporting the second quarter-on-quarter decline in most economic indices, suggesting that the immediate post-Brexit boost might be tailing off for the sector.

Suffolk manufacturing businesses are now under-performing against the rest of the East of England as a whole across virtually all of the criteria covered by the QES.

The balance of manufacturing firms reporting an increase in overseas orders fell from +18% to 0%, and fell from +7% to +2% for those in services. However, manufacturing businesses remain in positive territory, with the exception of cashflow where there was a negative balance of – 14%.

The figures are based on responses from 143 Suffolk-based organisations, with 37 from the manufacturing sector and 106 involved in services.

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Paul Simon, Suffolk Chamber’s communications and marketing manager, believes the figures suggest a further “readjustment” from the highs reached in the last quarter of 2017, especially for manufacturing.

“Suffolk’s manufacturers appear to be suffering from both less positive news on sales and orders on the one hand and continued difficulties in recruiting staff on the other,” he said. “These results will strengthen our resolve to work through the British Chambers of Commerce to fix the business fundamentals including a reduction in up-front business costs, reforms to the Apprenticeship Levy and increased infrastructure spending to help sustain the growth plans of businesses, but especially those in the manufacturing sector.”

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The figures released also show that although less manufacturing firms are hiring new staff (falling from 15% to 11%), the service sector is more buoyant, rising from 12% to 25% of companies taking on new employees.

Like many of Suffolk’s manufacturers, it’s been “a challenging year” for Graham Burchell, managing director of the household cleaning products firm Challs, based in Hadleigh.

“But we are in sound shape,” he adds.

Challs trades at about £10m a year, and had been planning for about 20% growth this year. “Because of uncertainty we are getting 5% instead,” he said.

Challs supplies into the UK retail trade and also exports to Australia, SE Asia and America.

“Our trading partners overseas are concerned with what’s happening. The Brexit uncertainty means people don’t want to make new investments. They want to wait until the Brexit fallout is announced before having a sensible conversation with UK companies.”

Mr Burchell is also concerned by the “raw material inflation due to Brexit.” “Manufacturing costs have gone up significantly in the last year,” he said. “Supermarkets are looking to drive down costs and putting pressure on manufacturers.”

As Challs is trading mostly outside the EU, Mr Burchell would like the UK to come out of the customs union with the EU . “We want to come out of Brexit being free to set up trade deals with non EU countries like Australia, who would be very content for us to join the trans pacific trade partnership.”

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