Amidst the demise of the steel industry, the struggles of SSI, Caparo and Tata have been dominating local headlines; just this week we have heard that Tata is planning to shed another 1050 jobs. The outlook perhaps seems somewhat bleak for industry in the North East. However, recent statistics are showing that the North East has other strengths, with four in particular showing promise:

1. Construction
Over a third of construction companies based in the North East are reporting an increase in their workloads. With the recent formation of the Construction Alliance Northeast (“CAN”), there is increased optimism for the construction sector in the North East, particularly in comparison with the last few years. Historically, one of the key problems has been that public sector contracts have been given to large national firms often based in the South, whilst capable local companies with the relevant expertise are being overlooked. CAN, a collaboration of the four main trade bodies which is also supported by over 500 SMEs, aims to address this issue. Coupled with the government’s intention of creating a ‘Northern Powerhouse’ it is hoped that more contracts will start to go to local construction firms. A worry is the need for skilled labour, with construction firms having recently highlighted in particular a need for bricklayers. Despite this, the majority of companies are feeling more positive about the outlook for the future, and there has been an 11% increase in the number of businesses in this sector since the end of 2014.

2. Manufacturing
The steel industry aside, the North East’s manufacturing sector is still a big contributor to our economy. When considering our export potential compared to rivals such as China, there are a number of hurdles to overcome: higher labour costs and business rates; increasing energy prices; and our strong currency, yet despite this there are areas which are still managing to thrive. The motor industry is still strong, with Nissan currently exporting vehicles to over 90 countries from the UK. According to the North East Chamber of Commerce (“NECC”), which promotes the region’s exporting success, the North East supplies an abundance of products to markets across the globe, from marine navigation equipment for Vietnam to floral foam products for Oman. Cash assistance, such as The Tooling Fund, which is making £14m available to companies manufacturing tools in the UK is bolstering businesses by providing the investment that they need at low repayment rates.

3. Hospitality
Statistics indicate that restaurant and pub openings in the North East have outstripped those in London over the past 5 years at 20.6% compared to 20% respectively. As with construction, the industry is now facing a skills shortage, something that NE1 – a business improvement company – are hoping to help address through a collaboration with other local companies, such as Fat Buddha, by creating an 8 week, employment-based training programme which results in a Level 1 NQV in Hospitality. If schemes like this can continue to attract and retain the right staff for the food industry to support increasing demand, it could be a success story for the North East.

4. Transport
With an increase of over 200 regional companies in December 2015 since the same time the previous year, transport was the fastest growing North East industry in 2015, according to R3’s research. Nexus recently introduced a Pay As You Go system, which applies to the Tyne & Wear Metro, as well as some bus routes. Outside of London, it is the first network in the UK to offer this service, and Nexus has already seen an increase in sales due to the convenience of the new system, and savings on cheaper tickets. The popularity of internet shopping and lower fuel prices are also thought to have contributed to the growth, as well as introduction of Uber to Newcastle in April 2015.

These growths show that the North East still has great potential, and despite blows to the steel industry, it is still the only region of the UK to export more than it imports. Skills shortages are beginning to be addressed; the number of apprenticeship take-ups has significantly increased over the past two years, particularly in the 25+ category which has seen increases of over 30% over the past 12 months. Clearly, we are seeing some changes in the landscape of the industry in the region but there is potential for newer businesses to begin to replace employment opportunities no longer available elsewhere.

Charlotte Tasker
Practice Development Executive

 

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