Manufacturing 'will lose 140 000 jobs this year' warning

More than 140,000 manufacturing jobs will be lost this year in the wake of a "dramatic" downturn which is cutting deeper into British industry, a new report has warned.

The Engineering Employers Federation (EEF) said research among almost 800 companies made "grim reading", with a slump in output and orders, increased job cuts, huge constraints on cashflow and warnings that the outlook could get worse.

The EEF said it was now predicting that manufacturing will decline by 8.6 per cent this year, the worst figure since the recession of the early 1980s.

Chief economist Steve Radley said it was difficult to find any glimmers of hope in the study, apart from resilience among firms to survive the recession.

All sectors of manufacturing have suffered falls in output and orders and have cut jobs in the past three months, with car firms the worst hit, the survey showed.

The speed of decline has surprised the industry, with some firms who enjoyed their best year for a decade in 2007/8 now experiencing the worst economic conditions for 30 years.

Firms have been trying to retain skilled workers, but a "significant" number were now having to make redundancies, said Radley.

The EEF forecast 140,000 jobs will be lost this year, but Radley warned this could be higher if supply firms go out of business.

"There is a danger of what will happen to the supply chain. If we lose a significant number of companies in the supply chain that has a knock on effect."

He called on the government to speed up its help for industry to survive the recession and said action should be taken to help firms hold on to skilled staff through measures such as temporary subsidies.

Governments in other countries including as Germany, Portugal and Holland were offering such help and there was anecdotal evidence that foreign-owned firms were cutting back more heavily in the UK, said the EEF.

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