Industry leaders tell Government to sort out infrastructure in wake of floods

A Chinook helicopter delivers materials to repair to the flood defence systems in York
A Chinook helicopter delivers materials to repair to the flood defence systems in York
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INDUSTRY LEADERS have called on the Government to kickstart a long-term strategic assessment of Britain’s infrastructure needs in the wake of flooding that brought chaos and disruption to towns and cities across Yorkshire.

EEF, the manufacturers’ organisation, said greater planning for infrastructure such as flood defences is important to ensure a robust and resilient business environment for manufacturers and other sectors to “grow with confidence across all parts of the UK”.

The Government has faced widespread anger from flood-ravaged communities after cutting funding to flood defence schemes in Yorkshire, including a £190m scheme in Leeds.

Andy Tuscher, regional director, urged ministers “to learn from recent events and redouble their efforts”.

Manufacturers have been hit hard by flooding in parts of the region. In response, Leeds council has launched a support scheme to help businesses get up and running again. Retailers have also been badly affected in flood-hit areas.

Rob Dobson, economist at Markit, said flooding would have a short-term impact on manufacturers while transport networks, factories and customers recover. He added that the bigger impact could be felt in the service sector as trade for businesses such as hotels and restaurants is lost rather than delayed.

Howard Archer, economist at IHS Global Insight, said the flooding would hit production and warned that smaller manufacturers could be severely jeopardised if they are unable to resume output relatively quickly.

The sector, a big employer in Yorkshire, is struggling for growth after a difficult year. Latest figures show UK factory output ended 2015 by growing at its slowest pace for three months.

The closely-watched CIPS/Markit purchasing managers’ index (PMI) survey posted a reading of 51.9 in December - where 50 separates growth from contraction - down from 52.5 in November, and the sector’s 16-month peak of 55.5 in October. Economists had expected growth in December to come in at 52.8. Manufacturing production over 2015 was lower than the previous year, the survey added.

However, the report pointed out that factory output rose for the 33rd month in a row, underpinned by higher domestic orders and exports to such countries as continental Europe, the US and China.

The consumer goods sector remained the prime driver of production and new order growth, despite seeing its rates of expansion ease over the month.

Mike Rigby, head of manufacturing at Barclays, said: “2015 was a challenging year for the sector as manufacturers sought to remain competitive and hold their profit margins.

“With export orders hampered by the strength of sterling and a sluggish Eurozone only recently showing signs of improvement, domestic demand continues to be the main driver of growth.

“As we enter 2016, vital investment, differentiation of products on quality and service and a firm eye focused on costs should be top of manufacturers’ new year resolution lists.”

Lee Hopley, chief economist at EEF, said the PMI report confirmed her view that manufacturing output is likely to be flat over 2015 as a whole.

She added: “The question now is whether the sector can regain much needed momentum in 2016. Industry PMI readings from Europe offer a few reasons for optimism that a recovery across the region will finally start to benefit UK exporters, but further weakening in China is likely to be a counteracting force into 2016.”