Illawarra industry on the up, for some

The picture for manufacturing still looks fairly bleak nationally, but there are a few bright spots in the Illawarra where some companies continue to perform well, Australian Industry Group regional manager Leanne Grogan said yesterday.

Ms Grogan said Leussink Engineering was one such example.

It began five new apprentices on their training journey at Wollongong TAFE this week.

"While generally the manufacturing sector in the Illawarra is suffering from the high dollar, ongoing increases in energy costs and increasingly uncompetitive unit labour costs, a number of local companies are doing well," she said.

"They have focused in the past few years on increasing the skills of their labour force and servicing niche markets that are outside the region."

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) dropped 4.1 points to 40.2 in January.

Any reading below 50 represents a contraction in activity.

Ai Group chief executive Innes Willox said the well-entrenched pressures that had confronted the manufacturing sector for several years had been compounded by a slowing in the broader economy.

"The extent of the contraction is reinforced by the ongoing contractions in January of the production, employment, new orders and exports sub-indices of the Australian PMI," he said.

The strong Australian dollar, soft demand and cautious industry outlook were all cited as reasons why manufacturing contracted further in January.

It was the 11th consecutive month that new orders across the manufacturing industry had contracted.

In January they were down 6.3 points to 39.4.

That was compounded by a continued increase in input prices as well as a further fall in selling prices.

Overall manufacturing production was weaker, exports fell further and wages and input costs remained high.

Mr Willox said while successive interest rate reductions in 2012 had not yet turned things around, further cuts might eventually help.

"The rate cuts to date have not offset the combined impacts of the substantial contraction in fiscal policy along with the structural challenges due to more intense international competition, the high dollar, ongoing increases in energy costs and increasingly uncompetitive unit labour costs," he said.

"Fortunately, the Reserve Bank has scope to further reduce interest rates to help reverse the slowing in the domestic economy."

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