40 manufacturing survey
Manufacturers predict expansion in year ahead The leading association of independent accountancy firms, MHA surveyed over 400 clients and contacts in the manufacturing and engineering sectors in July 2015. The annual report has become an established barometer of the sector.
Respondents ranged from companies turning over less than £1 million to global players with significant industry presence, both nationally and internationally.
Industries included aerospace, automotive, agriculture,
biotechnology, chemical, construction, electrical, food and drink, healthcare, leisure, metals and materials, oil and gas, pharmaceuticals, renewables and transport, to name but a few.
Key findings
• Optimism for growth over the next 12 months is evident with 76% predicting expansion.
• 28% cite problems recruiting skilled staff as the main barrier to growth and 26% would like to see the Government expand skills training in schools and colleges.
• 55% expect to increase headcount in the next year, with 56% taking on apprentices.
• 49% are aiming to offset production cost increases through efficiency gains, with 74% reluctant to raise end prices.
• There was a 15% increase in the number of SME manufacturers trading with the eurozone with smaller increases in the numbers exporting to North America and Asia (excluding China),
Financial considerations and business confidence
68% of respondents reported seeing growth which is a slight decrease from the previous year.
How was 2014 in terms of revenue growth?
The survey also includes analysis by the prestigious WMG – the Manufacturing Group at the University of Warwick – and from Philippa Oldham, head of transport and manufacturing at the Institution of Mechanical Engineers.
The state of the manufacturing nation Dr Mark Swift, WMG at the University of Warwick
The CBI’s latest projections have predicted 2.6% growth overall for this year which is not far behind what should have been argued as strong growth of 2.7% in 2014. The manufacturing sector is reporting an upturn in optimism with healthier order books and growth reported by 68% of respondents in this year’s survey.
However, with the UK subject to forces beyond its control, such as global raw material and energy price oscillations, foreign exchange currency fluctuations, and volatile share prices, the sector will remain fragile during the continued journey to full economic recovery. The increasing Chinese debt crisis should also not be underestimated. Even though this may drive a fall in the cost of raw materials in the short term, if China’s economy decelerates, it could also push back our own economic recovery.
Manufacturers, particularly SMEs, now more than ever, seek a prolonged period of stability above anything else, both economically and politically. Many manufacturers are now achieving growth in their organisations off the back of an economic slowdown. However, there is a deep risk that an economic contraction could throw them off course. Manufacturers need to think long term about how they build solid foundations alongside growth, to be prepared for any future economic downturn.
Whilst the survey also shows more manufacturers are investing in new apprenticeships and skills, UK government and large industry players all need to make a concerted and long-term effort to further support the supply chain with the skills and resources it needs.
Barriers to growth
Growth drivers over the next 12 months are many and varied. 65% cite an increase in demand with 51% believing that an expansion of their product range or further diversification will be helping to drive revenue streams.
How do you think the next 12 months will be in terms of revenue growth?
When looking at barriers to growth over the next 12 months, 28% felt that recruiting appropriately skilled staff was their main concern, 25% reported working capital constraints and funding is a concern for 12%.
What is your business' main barrier to growth in the next 12 months?
www.businessmag.co.uk
THE BUSINESS MAGAZINE – THAMES VALLEY – NOVEMBER 2015
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