2009 will be a tough year for manufacturers

Business leaders are predicting a tough year ahead as the effects of the global downturn feed through to producers and manufacturers.

The dairy sector in particular faces a tough 2009, according to trade body Dairy UK. However, it offers a crumb of comfort in predicting an eventual end to the “bleak mixture” of difficult trading conditions, high input prices and further regulation.

Dairy UK expects cost relief to start feeding through to the sector from lower oil prices this year.

Director general of Dairy UK, Jim Begg, said: “Milk prices, input costs, energy prices, increasing regulation and falling consumer confidence; all of these are serious concerns in the months ahead.

“We know that dairy farmers are experiencing very tough conditions, with historically high prices still for many inputs and pressure on returns. Milk processors are also facing a difficult market. They are caught between calls for high milk prices and a drive for lower consumer prices, and they are responding by rationalising and cutting costs.”

Meanwhile, the Confederation of British Industry’s director, Richard Lambert, has called for strong business leadership to cope with the challenges that lie ahead.

“Economic conditions have deteriorated so rapidly in the past few months that many businesses have had a struggle just to keep up with what’s been going on,” said Lambert in a New Year message.

“For some, the short-term battle for survival will now be all that matters. But for most business leaders, there will be important choices to be made in the months ahead, between the need to conserve resources over the short term and the opportunity to build up a stronger position to benefit from the recovery when it comes.”

He urged businesses to resist the temptation to adopt a bunker mentality: laying off staff across the board and cutting back on training, but instead to plan for the longer term.

“Business leaders must retain their own sense of perspective, and ensure that they encourage their firms not to become completely defensive - and lose sight of how to push forward issues where their judgement tells them to do so,” said Lambert.