Price pressures make it tough for North East’s manufacturers

Manufacturers are feeling the pinch across the board according to the latest report compiled by the North East Chamber of Commerce (NECC).

The largest independent survey of its kind in the UK reveals a challenging picture — with rising concerns about costs and workforce issues.

Businesses from across the North East contributed to the 2024 Q4 NECC Economic Survey’s findings ahead of what’s expected to be a tough 2025.

And the report makes for bleak reading from a manufacturing perspective as price pressures continue to affect confidence and growth.

Labour costs have emerged as the dominant pressure across sectors, with manufacturers (87%) most affected. Despite a 2.3% year-on-year decline, the 7.4% quarterly increase underscores persistent issues. Another significant pressure was the cost of raw materials with 65.2% of manufacturers citing this as a concern.

The NECC’s latest Economic Survey reported that market challenges have intensified with 76.9% of businesses highlighting staff costs as a major concern — a 27.8% increase from Q3 2024.

Businesses are increasingly seeking part-time (+5.9%) and temporary (+1.7%) staff, while demand for full-time staff has declined by 5.1%. Recruitment difficulties remain, particularly for skilled manual and technical positions — 63.6% of manufacturers reported problems.

Exporting activity has also decreased, with a 4.1% quarterly drop and a 2.5% year-on-year decline. Manufacturers (78.3%) remain the primary exporters in the North East and the Chamber’s 

Rhiannon Bearne, executive director of policy and representation and deputy CEO at the Chamber, said: “The continued decline in reported levels of UK sales and exports underscores some of the fragility of current trading conditions. These insights make it clear that our work — amplifying the voice of the region’s businesses and advocating for change at all levels of government — remains more crucial than ever.”

During Q4 52% of NECC’s respondents were concerned about energy prices. By sector, this was 65.2% of manufacturing businesses — 76.3% of businesses said they had taken action to try to reduce expenditure on energy.

Callum Thompson, CEO of Business Energy Claims, fears concerns over energy prices could force manufacturers to make hasty decisions regarding seemingly attractive contracts without doing the necessary due diligence.

“Across the board we’re seeing businesses inadvertently paying over the odds because they’ve been mis-sold energy contracts which often include huge hidden broker fees,” he explained. “There’s a lot of panic buying given the price pressures facing manufacturers and that’s understandable. But we’re doing our best to help firms claw back money they might be owed from unscrupulous energy providers.”

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