The North East’s booming engineering sector has surpassed London for growth by almost six per cent over the past year, according to a study by Nixon Williams.
Buoyed by the strength of the region’s automotive and rail sectors, research by the market-leading accountancy provider shows between 2014 and 2015 the number of engineering businesses in the North East jumped by 17.6 per cent, from 595 to 700.
This compares to a five per cent increase in engineering businesses across the UK as a whole, from 20,490 to 21,510 enterprises. The number of engineering businesses in London jumped by 11.8 per cent over the past year, from 1,985 to 2,220.
The North West is the third fastest growing region for engineering businesses, increasing by 9% between 2014 and 2015, from 1,895 to 2,065. This is due to the ongoing decommissioning of Sellafield nuclear reprocessing site in Cumbria (North West), which is one of the largest engineering mega-projects outside London.
The analysis by Nixon Williams shows that despite the recovery in the engineering sector in most regions in the last few years, the number of engineering enterprises in the UK is still 11 per cent below its 2009 peak. There were 24,220 engineering businesses in the UK in 2009.
Victoria Kelly, practice manager at Nixon Williams, said: “The engineering sector is rebounding strongly, but that recovery is very unevenly distributed. At least three regions – Wales, the West Midlands and the South West – are still seeing a contraction in the number of engineering businesses. At the other end of the scale you have the North East and London well into double digit growth.
“At the current rate of growth it will be another three years before the total stock of engineering businesses exceeds the 2009 peak.
“London has led the pack in recent years, buoyed by Crossrail, which has fuelled engineering start-ups in the capital, but the North East has now taken up the baton. The North East has established itself as an engineering powerhouse with multinationals like Nissan, Hitachi, Komatsu and Caterpillar all present in the region”.
“Alongside automotive, the North East has vibrant rail, aerospace and defence sectors. All these sectors support a supply chain, which is where many engineering start-ups tend to emerge as providers to the large multinationals,” added Kelly.
Nixon Williams says that skills shortages in engineering, which have been evident in London and the South East for some years now, as starting to become more prevalent in the North East. A cohort of senior engineers are reaching retirement age, and apprenticeships have been slow to recover from their recessionary decline.
Victoria Kelly says: “It’s low cost base and talent pool make the North East an attractive location for engineering businesses, but skills gaps are widening. While the number of apprentice starts is increasing, the drop-out rate is still very high. The North East needs to ensure that its skills base is appropriate to the needs of engineering businesses so that it continues to attract inward investment”.