Manufacturers' organisation the EEF has urged the Chancellor to use his Budget address the rising costs faced by industry and accelerate positive plans to transform the environment for doing business in areas such as skills and innovation.
The plea comes as new figures from the Office for National Statistics tomorrow show the number of jobs lost in manufacturing since Labour came into power in 1997 has passed the one million mark.
Evidence also suggests that UK manufacturers believe the business environment is becoming less competitive with more skilled jobs set to move overseas.
The EEF said that while some of the losses can be attributed to inevitable global restructuring and the need to offshore for strategic reasons and cost reduction, it was "growing increasingly concerned that the UK business environment is becoming less welcoming due to rising business costs, tax and regulation."
According to an EEF survey of over 500 manufacturers, almost half of manufacturers said that more production would be moved outside the UK over the next five years, with the primary reason being to achieve cost reduction.
The survey also highlighted the UK's growing uncompetitiveness. On a rating of 1 (negative) to 5 (positive) the UK scored below 3 on five out of six competitiveness indicators – transport, planning, other business costs, taxation and regulation. Only skills availability was regarded as having a neutral impact on businesses.
“These losses are a graphic illustration of the competitive world in which manufacturing lives day in day out, forcing manufacturers to constantly look for new markets and the right business environment," said EEF Director General, Martin Temple.
“We must ensure that we do not push companies and skilled jobs abroad unnecessarily by adding costs and legislation which smother entrepreneurship and destroy competitiveness.”
“The government has an ideal opportunity today to send a signal to business that it understands these pressures by taking steps to reduce costs and pressing ahead with positive efforts to invest in science and innovation," Temple said.
CBI director general Digby Jones added that the strength of sterling had also damaged exports, while the growth in public sector employment had squeezed out some companies at the more vulnerable end of manufacturing.
David Frost, director-general of the British Chambers of Commerce, agreed.
"Manufacturing matters a great deal," he said.
"Public sector jobs have to be paid for by the productive part of the economy. The manufacturing jobs that have gone were well-paid posts with hourly rates higher than in the service industry."