The closure of Longbridge has contributed to a sapping of confidence in the manufacturing sector, according to the latest quarterly economic survey from Birmingham Chamber of Commerce and Industry.
Falling sales and smaller advanced order books have contributed to even tougher conditions, while fewer companies are now working at full capacity.
The survey period coincided with the closure of MG Rover and it seems inescapable that the disappearance of the car company has influenced the poor figures, the chamber said.
The study, which was produced in association with chartered surveyors CB Richard Ellis, is for the second quarter of the year and shows a marked decline in confidence among manufacturers.
That, to a large extent, is attributed to the closure of Longbridge in early April.
While companies reporting an increase in export sales over the past three months have increased from 35 to 36 per cent compared with the previous month, annual figures are down by nine per cent.
Firms reporting advance export orders have dropped to 32 per cent, compared with 43 per cent in the first quarter and 47 per cent annually.
The home market was even more depressed.
Only 30 per cent of manufacturers increased sales against 37 per cent in the first quarter and 36 per cent a year ago.
Order books also declined, with only 21 per cent reporting an increase against 33 per cent in the previous quarter.
Forty-seven per cent, compared with 30 per cent in the first quarter, said they had decreased.
Chamber policy executive Charlotte Ritchie said: "We are probably seeing the impact of the Longbridge closure because only 23 per cent of manufacturers are working at full capacity, a drop of nine per cent on the previous quarter."
Confidence that turnover and profitability would increase has also slumped.
Twenty-seven per cent forecast that their turnover would decrease and 30 per cent expected profitability to fall.
Investment plans in equipment, buildings and training were also revised downwards.
The service sector reported similar trends with depressed home and export figures although the drop in forward orders was modest.
Ms Ritchie said: "The collapse of MG Rover must have made a significant contribution to the decline in business confidence with manufacturing clearly suffering the biggest hit and the service sector unable to escape repercussions."