SOUTH’S MANUFACTURING RECOVERY TO BE ANAEMIC – EEF/BDO survey The upturn in the south’s manufacturing sector is likely to take some time to take hold with cash flow constraints, continued uncertainty about the strength of markets and tighter credit conditions weighing on recovery prospects into next year according to a major survey published by BDO and EFF. The third quarter survey shows that whilst conditions have stabilised in recent months, manufacturers are not signalling expectations for a quick turnaround in the sector’s fortunes. The specific outlook for the South East of England is cautiously optimistic. Companies have continued to scale back production in the last three months with output showing -21%. However, the survey predicts that production will only be down by -3% in the next three months across the region. Looking at employment in the South East’s manufacturing sector in the next three months the survey predicts that employment levels will improve slightly but will still remain negative at -18% Commenting, EEF Chief Economist, Steve Radley, said: “Manufacturers are telling us that output is starting to stabilise but there is little sign of confidence coming back. Production is well below pre-recession levels and the road to recovery is likely to be long and bumpy. Tight cashflow and continued problems with access to finance are likely to be major roadblocks. The government has a key role to play in ensuring these problems don't prevent companies from making the investments needed to take advantage of the recovery when it comes." Robin Lloyd, Head of Manufacturing at BDO in Southampton said: "Although the pace of decline is easing, it's clear that the hoped for recovery is not imminent. This quarter has seen an improvement in output and orders but both balances continue to show double digit declines and the forecasts show continuing uncertainty in these key indices. The employment picture remains bleak and manufacturers have had to stop or delay investment plans as a result of the economy and the dire state of the financial markets. The survey suggests that 2010 will be a difficult year, with subdued growth at best across the sector as a whole - and continuing huge challenges for key sub-sectors such as automotive.” He added: “Looking forward, whilst companies expect to see an improvement in demand in the next quarter and into 2010, the picture remains mixed. As a result, we expect manufacturing output to contract by 10.5% this year, but to post a small growth of 0.5% in 2010.” ENDS Words: 415 EEF, the manufacturers’ organisation is the representative voice of manufacturing in the UK together with ECIA, the Engineering Construction Industry Association and UK Steel. EEF has a growing membership of almost 6,000 companies of all sizes, employing some 900,000 people from every sector of engineering, manufacturing, engineering construction and technology-based industries. The survey was conducted between August 5 and August 26, with 639 companies responding. The results presented cover the full range of engineering sectors – metals, metal products, mechanical engineering, electronics, electrical engineering, motor vehicles and other transport equipment. Note to editors BDO LLP operates across the UK with some 3,000 partners and staff. BDO LLP is a UK limited liability partnership and a UK Member Firm of BDO International. BDO - Belfast, a separate partnership, operates under a licence agreement. BDO International is a world-wide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity world-wide and no BDO Member Firm is responsible for the acts and omissions of another member. The network is coordinated by BDO Global Coordination B.V., incorporated in the Netherlands with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located. The combined fee income of all the BDO Member Firms was $5.14 billion in 2008. The global network has 1,095 offices in 110 countries and more than 44,000 partners and staff provide business advisory services throughout the world. BDO LLP and BDO - Belfast are both separately authorised and regulated by the Financial Services Authority to conduct investment business. BDO is the brand name for the BDO International network and for each of the BDO Member Firms.