ENGINEERING sub-contractors in North Yorkshire are "hanging on by their fingernails and their fingernails are getting shorter."

That is the frightening alert from a York engineering boss, as the latest business trends survey by the Yorkshire and Humberside Association of the Engineering Employers Federation finds one-in-five firms expecting job cuts this winter.

Jeffrey Yoward, managing director of Sheppee International, who took part in the survey, said that even his firm, which makes machinery for the glass container industry, was not completely protected by being in a niche market.

"We have a double whammy in that, as manufacturers, we are competing with others at home and abroad and as exporters we are competing in a tough overseas market," he said.

He had no plans to lay off any of the 36 people at his plant in Halifax Way on the Airfield Business Park, but it was clear that many of his smaller sub contractors were in trouble.

"Everyone, without exception, is hanging on by their fingernails and the fingernails are getting shorter and shorter.

"Many of them - some long-established companies too - are knocking on our door asking for work."

Should any of them collapse he would have to revert to in-house capability. "It's possible because at one time we had 64 people working for us. We will probably rely on overtime initially to meet our needs."

The survey by the Yorkshire and Humberside Association of the EEF concludes that many engineering companies across the region should "expect another winter of recession."

Ian Hughes, Association director said today that with little improvement reported in order books or margins, almost a fifth of companies participating admit that they may be forced to cut back on jobs over the next three months.

"The position is both fluctuating and unpredictable," he said. "Business started showing signs of improvement in the spring but this has evaporated with both home and export order books weakening."

"Downward pressure on prices remains significant, with the inevitable effect on margins. More than 40 per cent of the firms in our survey admitted that margins had worsened during the third quarter of the year." said Mr Hughes.

Almost a quarter of the companies taking part in the EEF survey said there had been a reduction in the prices they had been able to achieve on home market orders. About 12 per cent reported similar problems in export markets.

Meanwhile, business failures in Yorkshire generally are increasing according to the latest figures published today by professional services firm Deloitte & Touche.

The number of receiverships and administration appointments in Yorkshire and Humberside rose in September to 16, a jump of 77.8 per cent on the previous month's total of nine.

Updated: 09:42 Tuesday, October 29, 2002