Manufacturing a recovery, will be tough says West Midlands CBI

Dec 10 2009 by John Cranage, Birmingham Post

“It is tough for the banks because they have to be prudent in their lending but are under pressure to lend more,” he said.

While bigger companies have the option of turning to their shareholders to raise money, small and medium-sized enterprises are having to draw up strong business cases in order to persuade their banks to lend money to finance new products or ventures.

Mr Russell said his own industrial sector, automotive, had been hardest hit by the downturn but had benefited from the “positive impact” of the scrappage scheme under which buyers get a £2,000 discount, half of which is financed by the Government, on a new car when they trade in a vehicle ten years or more old.

The extra VAT banked by the Government makes scrappage cost-effective.

“Thirty per cent of my sales are being done under the scrappage scheme,” Mr Russell said.

CBI regional director Chris Clifford said after this week’s regional council meeting that improving links between business and higher education was essential in order to boost the number of students with the science, maths and technology skills needed by high-value manufacturers.

The West Midlands also needs to tackle growing unemployment among young people, Mr Clifford said.

One in four of the region’s young are out of work compared with one in five nationally.

“We are in danger of failing a whole generation,” he added.

CBI members are also pressing for reform of the public sector, even though it might cause strikes and disruption in the short term.

“The CBI has identified £120 billion of efficiency savings which could be looked at,” Mr Clifford said. “But if there is to be change, the next government will have to grasp the nettle early because if it doesn’t, it will go back in the ‘too difficult’ box.”