More supportive Government policy is at the top of the priority list for manufacturing executives with operations in the North East, according to a new report from KPMG.

The survey found that more than half (59 per cent) of manufacturers with a foothold in the North East recognise the need for more supportive Government policy. They name it as the number one factor to helping improve productivity in their organisations, while a better educated workforce and flow of fresh talent came second and third respectively.

Rod Wilkinson, Head of Corporate Finance in the North East at KPMG, said: “Our report found that the majority of manufacturers with operations in the North East want the scope of the government’s industrial strategy to extend to help the region’s firms boost productivity. The Government’s green paper indicated the beginning of a closer working relationship with industry, which is a step in the right direction, but we must not rest on our laurels

“It’s also unsurprising to see education and talent acquisition high on manufacturers’ agendas. If the skills challenge is not effectively addressed, manufacturing and associated industries are at risk of decline, regardless of the region they operate in.

“In the North East we have some of the best higher education institutions in the UK. Firms should look to strengthen their links with universities, while investing in skills and continuous development within their own organisations to bolster the North East’s productivity and prosperity for the future.”

Just under half (48 per cent) of North East manufacturing businesses are contemplating moving some of their operations out of the UK in order to boost productivity or reduce costs in the next three years, with India, China and The Czech Republic appearing to be the most attractive relocation destinations.

When our survey was carried out in January, more than two thirds of respondents expected uncertainty around Brexit. However, North East makers are an especially resolute group.  Although some are concerned about exchange rates, labour pressures and higher indirect taxation, they are also taking a range of practical measures to prepare. These include partial relocation, supply chain management, increased business development, and new sources of financing.  North East manufacturers realise that Brexit will demand a burst of innovation from both the private and public sectors if the UK is really going to reach new global markets and deliver on its potential,” added Wilkinson.

If faced with rising costs, the majority of respondents (59 per cent) plan to make up for these by either saving costs elsewhere, or by absorbing them. While 41 per cent expect to pass these on to the customer.

“Manufacturing has a fantastic heritage in the North East. The contribution of firms with operations here is a key component to a national industry that makes the UK the 11th largest manufacturer in the world. So government and industry need to rethink, and they need to do it together, if the UK is to seize new opportunities and sources of long term growth in a post-Brexit world,” concluded Wilkinson.