The West Midlands is set for another wave of job losses, according to a new survey released today.
The threat coming on the back of big employment blows from the likes of Jaguar, Peugeot and HP Sauce and a host of company crashes will be a bitter setback for the region.
And in contrast with a generally upbeat forecast for much of the rest of the country.
However there is hope that manufacturing is fighting back.
The survey, by the CBI and regional development agencies, found that business confidence in the West Midlands was marginally positive.
Domestic and export orders both increased, although at a slower rate than that seen nationally.
Further increases in both domestic and export orders are expected in the next year.
And firms in the region reported a healthy increase in output during the past 12 months, which is expected to continue.
However, employment fell, and is expected to decline further. Average selling prices slipped, and correspondingly the decline in profits seen was amongst the largest in the country though the deterioration in margins is expected to moderate considerably in the next year.
Firms in the region reported that regulation and red tape was the major constraint on growth, followed by inadequate business support from government, and finance shortages.
Overall, the survey found UK businesses more upbeat about future prospects than six months ago but profit margins are under fire from higher energy prices.
The snapshot, covering all sectors of the economy, also reveals that orders, output and jobs have continued to increase over the last year. London and the North-west are the most upbeat, closely followed by Yorkshire & Humberside.
Staff costs were identified as the most significant upward cost pressure by companies, with 41 per cent saying it was their major pressure - rising to over half of firms in London and the East of England.
Energy was a close second, highlighted by another 33 per cent of firms, although in the South-East, West Midlands and North-East energy was the biggest cost pressure.
Despite prices increasing across all the regions, only 11 per cent of firms were able to pass on all of these costs to customers and a third of businesses were unable to pass on any increases at all.
More generally, the modest pick-up in economic growth during the past six months is reflected in companies' order books.
Domestic orders continued to increase for a balance of eight per cent of firms and export orders rose for a balance of three per cent. Neither lived up to businesses' expectations of six months ago, however.
Businesses have increased their volume of output over the last year and at a faster rate in the last six months. A balance of 15 per cent said output volume rose during the past 12 months. Jobs increased at a slower pace.
A balance of five per cent - minus six per cent in the West Midlands - say employment is increasing, down from seven per cent six months ago. A balance of nine per cent of employers still expects employment to increase over the next year, but not in the West Midlands.
Doug Godden, head of economic analysis at the CBI, said: "The prospects for Britain's economy are brighter than they were six months ago.
"But at the same time, firms face a tighter squeeze on profits from higher energy and staff costs. Growth is also split across sectors so while finance and services thrive, for retailers and consumer services it is subdued.
"There are also signs that the long-awaited upturn in manufacturers' fortunes could be under way. But growth still falls short of rates we saw a few years ago and cost increases may not just damage profits, they could also hamper longer term investment and growth."
Terry Hodgkinson, York-shire Forward chairman and spokesman for the RDAs, said: "It is a relief to see demand picking up and it is heartening that expectations are for increased output.
"But profit margins are still being squeezed in every region, despite price increases in most."
Other findings in the survey were:
* On average, only nine per cent of businesses across England and Scotland have links for research and development with universities
* Sixty-eight per cent of companies in England and Wales have a website, with East of England and the West Midlands leading the way on 76 and 74 per cent respectively.
* Marketing was identified as the most significant area where improving skills would benefit business performance.