Manufacturers are fighting back, according to two separate reports on the sector.
They are busier than at any time in at least the past ten years, according to the latest quarterly economic survey produced by Birmingham Chamber of Commerce and Industry.
And, nationally, activity unexpectedly expanded at its fastest pace in six months in September, with output growth the strongest this year and rises in prices charged at a seven-month high, claimed the Chartered Institute of Purchasing and Supply/RBS purchasing managers' index.
The Chamber survey said 54 per cent of manufacturers worked at full capacity in the past three months - the highest figure on record.
The previous best was 52 per cent in December last year but figures slumped to 32 per cent and 23 per cent in the intervening two quarters.
BCI policy officer James Cooper said: "This trend is surprising but indicates how manufacturers are toughing out poor trading conditions.
"While a greater proportion have reduced their workforces over the past three months, the overall percentage balance has dropped among those reporting a decrease.
Many expect to increase their workforce over the next three months.
"Half of manufacturers have concerns about the rising price of raw materials so profit margins may be have been cut to the bone to achieve full capacity. However, the majority feel profitability will improve over the next year, which is an encouraging sign."
Some 32 per cent compared with 21 per cent in the previous quarter expected to be forced to increase costs over the next three months.
Sixty per cent expected profitability to improve, compared with 44 per cent in the previous quarter. Eighteen per cent felt it would worsen against 30 per cent in the previous three months.
Sixty-six per cent were confident that turnover would increase over the next 12 months compared with 53 per cent in the previous quarter.
However, investment intentions remained static, which probably reflected the reduced margins many were working under.
In the service sector, both export and home markets remained static while the number of firms working at full capacity reached 48 per cent, down from 55 per cent on the high recorded in the final quarter last year.
Like manufacturing, there was a marked reluctance to increase investment plans while 32 per cent expected to have to increase costs over the next 12 months.
However, confidence remained high with 79 per cent expecting to improve turnover and 73 per cent hoping to increase profitability.
Meanwhile the CIPS survey rose to 51.5 from 50.3 in August, the highest since March and comfortably above the 50 mark that divides expansion from contraction.
The output index climbed to 52.9, the highest this year and at a level "indicative of a solid expansion in production", suggesting there is no need for a Bank of England interest rate cut this week.
Indeed, the report showed strength across the board save for continued job losses in the sector and suggested manufacturing may again be turning the corner after contracting in the first half of the year - an official recession.
" New order books expanded for the fourth month running, with the rate of increase picking up to its fastest so far in 2005. This largely reflected improved global market conditions," the report said.
The new orders index rose to 54.1 in September, its highest since December, from 52.3. The exports index rose to its highest since July 2004 at 53.2 from 51.6.