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By Mark Broad
Economics producer, BBC News
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New Holland is now making about 90 tractors a day in the UK
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On the wall at the New Holland tractor plant is a map with lines stretching from its site in Basildon up to the Midlands, Newcastle and the Orkney Islands. The lines are used to demonstrate how efficiency improvements have cut the distances that workers walk on the production line. But at the start of this year, many workers were not doing any walking at all, as the global recession forced the plant to make temporary shutdowns. Like many manufacturing companies in the UK, New Holland is now gradually hauling production back towards pre-recession levels. Recovery signs The latest UK GDP figures showed that manufacturing output fell by 0.2% in the second quarter of 2009, a significant improvement from the 5.5% fall in the first three months of the year. During the worst of the recession, many companies stopped producing goods, as demand all but dried up. But many of those factories are now back up and running, although not yet back at pre-recession levels.
New Holland has been through many downturns and recessions since it was founded in rural Pensylvannia in 1895. But the current downturn was one of the worst that the company had experienced, with demand in many of its markets falling dramatically from last autumn. New Holland in the UK exports 80% of the tractors that it produces, making it very dependent on markets in Eastern Europe and the US. "The fall in the eastern markets was a lot faster than we expected," says Andrew Watson, a business director at New Holland. "The markets had been running at boom levels, but they dried up quite quickly, surprising a lot of people in the industry." Down days The company responded to the downturn in orders by shutting down the plant for 35 days in stretches of five days at a time. New Holland also had to lay off about 6% of its staff and use those still in the plant to carry out re-engineering work and improvements. With falling demand from its major markets, the factory went from producing 100 tractors a day down to 85 vehicles as the recession took hold. Now the company is back up to about 90 tractors a day, and it is hopeful that it can push that back to pre-recession levels by the end of the year. Production hopes At the depths of the downturn, sterling fell against nearly all major currencies, boosting hopes that cheap British exports could help to drag the economy out of recession. But while New Holland is seeing some improvements in Eastern Europe and the US, it is still not seeing the demand return to previous levels. "The demand over the last 18 months has softened substantially in the export markets that we serve here in Basildon," says Mr Watson. "However, we now think that we've reached a level of stability and we hope to increase production between now and the end of the year as the markets come back."
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We hope to increase production between now and the end of the year as the markets come back
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