Region’s business battling against the recession

Businesses across the region have been urged to embrace technology and get closer to their customer base to help combat the effects of the recession after new figures offered a stark insight into the full impact of the downturn on local firms.

The warning follows a survey which has revealed the true depth of the recession on the region's business community.

Findings released today show businesses across the eastern region have been hit by a sales slump, laid off staff and implemented pay freezes as they struggle to cope with the effect of recession.

Other findings suggested many companies were slow to embrace new technologies and IT to boost their business during difficult times, while others complained that trade was being affected by poor road communications.

However, there was some optimism too following the findings published by IT systems and service provider Cambridge Online Systems.

In its East of England Regional Business Survey, some firms had reported growth and a significant number still felt that the region was good for attracting highly-skilled employees and some were already focussing on future growth.

The surveyed covered 100 firms across Norfolk, Suffolk, Cambridgeshire, Essex, Hertfordshire, Bedfordshire, Northamptonshire and Lincolnshire and was carried out between late March and early April this year and asked companies to assess the impact of the 2009/10 recession on their business.

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Cambridge Online Systems chief executive Ray Olds said: 'There is no denying that businesses in the East of England had a tough time during the 2009/10 downturn and although the current situation is much improved, there are still serious threats to business growth that need to be overcome.'

As businesses have been forced to tighten their belts, a third highlighted the need to restrict price rises as a major factor in holding back their growth and thwarting investment plans.

But Mr Olds added: 'The most interesting finding from our research is the creativity and energy businesses in this region are applying to combat the effects of downturn, supported by improvements in their systems and processes to cut waste and deliver maximum value to customers at a time where price, flexibility and service is paramount.'

He reflected that rather than simply cutting staff numbers, businesses that have reviewed their systems and processes - and continued to invest - have found themselves better placed to ride out the recession.

Analysis of the survey has revealed that during the recession of 2009/10, 18pc of firms surveyed reported sales falling by more than 25pc while 26pc of firms had sales falling by up to 25pc. However, 28pc did report a sales growth of over 10pc.

Yet a number of firms also had to take action over staffing costs.

It has emerged that during that period, 49pc of businesses introduced pay freezes and 29pc cuts staff levels by more than 10pc. Companies in Norfolk were pinpointed as most likely to have cut staff levels.

And some firms fear they will have to take further action with 17pc of businesses still planning to introduce pay freezes and 9pc looking to cut 10% from their workforce.

However, Mr Olds added: 'It is not all doom and gloom and we are getting the impression from speaking to clients elsewhere in the UK that we are better placed than other parts of the country.'

Communications networks in the east remained an issue with 72pc of respondents agreeing the local road network need improvement.

There was also a clear split on business suport networks.

Some 46pc felt Business Link added no value to business while on the replacement of the regional business development agency EEDA with new Local Enterprise Partnerships, 50pc were in favour of replacing EEDA, 39pc were against and 11% were unsure.

Last night Chris Starkie, chief executive of Shaping Norfolk's Future, said he was not surprised by the findings.

'For the past couple of years firms have been cautious but rather than see the mass redundancies of previous recessions they have been sending people home early or introducing pay freezes and cutting their wage bills that way. But I foresee further pay restraint this year.

'Firms have also been preserving their cash in the bank and not investing in areas such as IT. They will be waiting to see what happens and if their order books start to grow.'

He said road networks, particularly the A11 was an issue with businesses in Norfolk.

'We know that many firms are concerned about the road infrastructure and the issue of the A11 has been raised by so many of the region's businesses,' he said.

'The figures in the survey reflect what we have been seeing. It has been a pretty tough year for the businesses in the private sector as it is now for the public sector.'