Other Manufacturing
May 2008
Introduction
This sector comprises a miscellany of unrelated manufacturing industries not elsewhere classified within the Standard Industrial Classification (SIC,2003). Its main constituent, nationally accounting for over 60% of total employee jobs is furniture manufacture but it also includes such diverse manufacturing activities as jewellery, coins and medals, musical instruments, toys, games and sports goods, stationers' goods, brooms and brushes, umbrellas, baby carriages, linoleum flooring and various items for personal use, craft and novelty goods (e.g. candles, artificial flowers, imitation jewellery etc) together with the recycling of both metal and non-metal waste and scrap into secondary raw materials.
Employment
Within Lancashire Other Manufacturing is a sizable sector with an employee workforce of over 7,800 people representing 7.9% of the sub-region's manufacturing workforce compared with a slightly lower 5.9% share nationally. Men hold more than three-quarters of these jobs and nearly 90% of all jobs are held on a full-time basis (Table 1).
| Employment Status | Employees | |
|---|---|---|
| No. | % | |
| Male full-time workers | 5,600 | 71.5 |
| Male part-time workers | 400 | 5.5 |
| Female full-time workers | 1,400 | 17.9 |
| Female part-time workers | 400 | 5.0 |
| Male workers | 6,000 | 77.0 |
| Female workers | 1,800 | 23.0 |
| Full-time workers | 7,000 | 89.4 |
| Part-time workers | 800 | 10.2 |
| Total | 7,800 | 100.0 |
| Source ONS - Annual Business Inquiry, 2006 | ||
Geographically Pendle District has long been the largest single centre of the industry in Lancashire and still accounts for over a quarter of employee jobs with a further 31% shared between Blackburn and Hyndburn (Figure 1). Beyond this significant cluster of activity in East Lancashire which overall accounts for more than 70% of the total industry jobs Preston also has employee job shares in the industry slightly above the national average.
Structurally, the industry remains highly fragmented. Most of the 533 establishments making up the local sector are small. The average size is about 15 employees with 90% of companies employing fewer than 25 people. Traditionally many of these smaller companies have included craft and bespoke family businesses. However, concentration is steadily increasing, partly in response to competition from foreign suppliers, with the higher levels of concentration within the retail sector providing a further spur towards consolidation. Firms with over 100 or more employees now account for more than a half of the sector's jobs (Table 2).
| Employee Size Band | Establishments | Employees | ||
|---|---|---|---|---|
| No. | % | No. | % | |
| 1-4 | 329 | 61.7 | 700 | 8.8 |
| 5-10 | 106 | 19.9 | 800 | 9.8 |
| 11-24 | 44 | 8.3 | 700 | 9.3 |
| 25-49 | 27 | 5.1 | 1,000 | 12.2 |
| 50-99 | 11 | 2.1 | 700 | 9.5 |
| 100+ | 16 | 3.0 | 3,900 | 50.3 |
| Total | 533 | 100.0 | 7,800 | 100.0 |
| Source ONS - Annual Business Inquiry, 2006 | ||||
Larger employers within Lancashire include Buoyant Upholstery, Nelson-based manufacturers of upholstered sofas, sofa beds, armchairs, recliners, etc; Cassidy Brothers plc, engaged in the design, tooling and marketing of miniature domestic and garden appliances scaled for childrens' role play; Famco Holdings Ltd, parent company to the Silentnight Group Ltd, one of the UK's leading bed manufacturers; Furnico Ltd, Colne manufacturers of upholstered furniture; GGI Office Furniture, manufacture and distribution of office furniture; HJ Berry & Sons specialising in providing chairs and tables for commercial environments such as restaurants, cafes, hotels, conference venues, etc as well as the domestic market; Senator International Ltd of Accrington engaged in the design, manufacture and distribution of office furniture; Solvent Resource Management Ltd in Morecambe engaged in the recycling and disposal of waste solvents and fuel blending from organic wastes; Space Kitchens & Bedrooms Ltd, manufacturers and installer of fitted kitchens; Sweet Dreams, Burnley manufacturers of beds, mattresses and accessories; and Tetrad, Preston manufacturers of hand crafted sofas and chairs. The distribution of the sector's companies across Lancashire is illustrated in Figure 2.
Employment Trends
Always a fairly small component of the local manufacturing base, Other Manufacturing enjoyed slow but steady growth in Lancashire over the 1960s and 1970s doubling employee numbers (Figure 3). Like many other manufacturing industries it then endured some contraction and rationalisation in the early 1980s due to weak demand from the construction and consumer markets. It was hit again even more severely in the recession of the early 1990s which saw a number of company closures and mergers. However, after 1993 employment levels again showed signs of quite strong expansion, often in sharp contrast to the experience of many other manufacturing sectors. Under-pinned by strong consumer demand linked to a buoyant housing market, this growth pattern was evident both in the principal furniture market sector which witnessed the net addition of nearly 1,800 jobs county-wide 1993-2004 and in the miscellaneous activity categories. Post-2004 however, it appears that this expansion has run its course with the sector, like many others, becoming ever more exposed to lower cost overseas competition as well as suffering from some shift in consumer expenditure patterns, particularly as the housing market has cooled. In terms of establishment numbers there has also been a small net increase over recent years, the increase being most noticeable in the small recycling sector.
| Furniture | Miscellaneous | Recycling | Total | |
|---|---|---|---|---|
| 1993 | 5,000 | 700 | 200 | 6,000 |
| 1995 | 5,900 | 1,200 | 300 | 7,400 |
| 1996 | 5,700 | 1,500 | 400 | 7,600 |
| 1997 | 5,800 | 1,700 | 400 | 7,900 |
| 1998 | 6,300 | 1,700 | 500 | 8,400 |
| 1999 | 5,800 | 1,800 | 500 | 8,200 |
| 2000 | 6,200 | 1,700 | 600 | 8,500 |
| 2001 | 6,000 | 1,000 | 500 | 7,500 |
| 2002 | 6,100 | 1,300 | 500 | 7,900 |
| 2003 | 6,800 | 1,200 | 600 | 8,600 |
| 2004 | 6,700 | 1,300 | 600 | 8,600 |
| 2005 | 6,200 | 1,200 | 500 | 7,800 |
| 2006 | 6,300 | 1,100 | 400 | 7,800 |
| Source ONS - Annual Employment Survey/Annual Business Inquiry | ||||
General Characteristics
Nationally the'Other Manufacturing' sector is an £19.4bn a year turnover industry generating some £6.7bn in gross value added, of which 55% is accounted for by furniture manufacture. In addition the industry supports a large supply chain of materials suppliers, component manufacturers, designers, contractors and retailers. The bulk of the products within this small sector are classified as household or personal consumer durables. As such it is greatly affected by such factors as housing activity, employment, consumer disposable income and consumer confidence levels. Over recent years imports across many of the sub-sectors have grown rapidly and now make a significant contribution to retail sales. In furniture, for instance, the UK is one of the largest importers in the world with a sector trade deficit of over £2bn per annum. The industry generally has a rather poor image and has difficulties in attracting appropriate skills at all levels.
Generally the 'Other Manufacturing' sector in Lancashire, as in the UK, remains a relatively labour intensive one with below-average manufacturing levels of productivity, earnings and investment though this is understandable for a group of industries with strong "craft" characteristics. Nonetheless, most indicators of performance have shown considerable improvement over the past decade. Total turnover of the local industry, now averaging over £570m per annum, expanded strongly, by more than a half in real terms 1994-2004 (Figure 4). Gross value added, at £225m in 2004 was 65% higher in real terms than in 1994 and labour productivity (GVA per head) rose by 35% bringing it virtually on a par with the UK industry average. Whilst the contribution of labour costs to value added has been decreasing with the spread of automation they remain high compared with other manufacturing sectors and the industry continues to place high value on craftsmanship. The rise in purchases may partly be a reflection of the increased use of out-sourcing over recent years including the import of products to be sold under own label.
Furniture, which in Lancashire comprises nearly 80% of the sector's total job count, is largely a casual consumer article and is characterised by a high unit price and an enduring life span. The market is generally saturated and 70% of domestic purchases are discretionary replacements with much of the remainder stemming from the formation of new households. Office and contract furniture, which has a strong presence in East Lancashire, are generally considered as investment goods.
There are, in fact a number of distinct sub-sectors in furniture and manufacturers are usually highly specialised in one or two types. In Lancashire the dominant ones are chairs and seats – especially in the form of upholstered furniture, mattresses and bedroom furniture, and office furniture. The latter two categories tend to be dominated more by larger companies but generally within the County the range of locally made products is wide, from highly crafted bespoke products to mass produced units and encompasses both nationally known branded products as well as locally distributed items.
The recycling component of 'Other Manufacturing' comprises the processing of waste and scrap and other articles, whether used or not, into secondary raw materials. A transformation process is required, either mechanical or chemical. It does not include the wholesale of waste and scrap that does not generally include a real transformation process. The latter activity provides for a further estimated 400 employee jobs across Lancashire.
For further details, please contact:
Peter Kivell
Tel 01772 534157
Email Peter.Kivell@lancashire.gov.uk