Slump 'will hit region hardest'

Manufacturing in the West Midlands is set to be the hardest-hit region in the UK as the recession starts to bite hard, it was revealed today.

The outlook for manufacturers across the region, particularly in the motor industry, has taken a significant turn for the worse, with trading conditions in 2009 set to be some of the toughest for two decades, manufacturers' organisation the Engineering Employers Federation (EEF) warned. It is seeking another cut in interest rates to boost demand.

The EEF, publishing its four quarter business trends survey and economic forecast together with Grant Thornton, said that despite the improved performance of manufacturing in recent years the sector was now going through a significant and sustained downturn.

It is calling for a further full point cut in interest rates by the Bank of England at its meeting this week.

Peter O'Grady, West Midlands spokesman for the EEF, said: "The survey shows manufacturers in this region are experiencing tougher times than the rest of the country. They have seen a considerable decrease in profit and orders, while planned expenditure, output and cashflow are also falling significantly.''

And in an ominous warning, he added: "Over half of the companies surveyed said that if the next quarter is as bad as they fear, they will have to make employees redundant.''

Jobs have been shed across the West Midlands in recent weeks, including 140 at the Firkin Bakery, 45 at Hixon, Staffordshire-based Energy Exhausts, 150 at Wolverhampton Council and 35 at Walsall-based Chamberlin & Hill.

The survey stressed that manufacturers had made substantial progress in recent years in improving their performance, but the next 12 months were set to be some of the most difficult times in the last 20 years.

What marked this downturn out from others was the "alarming rate" at which conditions had deteriorated through the autumn because of the problems in the financial markets, according to the EEF.