The West Midlands has lost 112,000 manufacturing and engineering jobs in five years as a result of competition from firms in China and India.

The startling figure appears in a new analysis of the regional economy, which warns that the recession will eat further into traditional industries.

According to the Regional Skills Assessment, the loss of production-based jobs has been compensated for by new employment.

About 90,000 new jobs have been created in the public sector and 50,000 in professional services and the service sector.

But industries once regarded as the bedrock of the West Midlands were all but decimated between 2001 and 2005.

Employment in electronics fell by 48 per cent, in motor vehicles by 35 per cent, rubber tyres by 40 per cent and medical technologies by 37 per cent.

The textiles sector dropped 40 per cent and ceramics was down by 42 per cent.

New employment is unevenly distributed. While the number of jobs available has increased in Birmingham, Solihull and Wolverhampton, employment fell significantly in Coventry, Dudley, Sandwell, Stoke and Walsall.

The report says that imports of cheap goods from the Far East mean that manufacturing firms in the West Midlands cannot remain competitive.

It warns: “Competition from China, India and other overseas locations with a lower cost base has led to firms either transferring production or ceasing trading. The worsening economic climate, moreover, is compounding the problem.”

Data produced by the West Midlands Regional Observatory shows that the region did not take advantage of the economic good times.

Although the number of people in work increased by three per cent between 2001 and 2005, this was the third slowest growth in England and only half of that in Yorkshire and the North West.

There is one glimmer of good news. The region is losing its reputation for having one of the least skilled workforces in the country.

Firms are spending more on training staff, with the result that the West Midlands is now almost at the national average for skills levels.

However, the report warns that companies feeling the pinch of economic downturn are already beginning to cut investment in training.

And a very low level of academic qualification among people seeking work coupled with poor graduate retention continues to hold the region back.