FOCUS FEATURE
REGENERATING THE EAST MIDLANDS
An increase in investment for manufacturers
By Amanda Glover, Marketing Manager at Economic Growth Solutions
The number of British SME manufacturers planning to increase staff headcount in the coming months has plummeted to just 30%, its lowest level for a decade, raising crucial questions around growth, productivity and competitiveness for the UK. With this concern tied to flat sales expectations and
profit predictions in the next six months, those considering how the sector will realise its ongoing growth plans will be buoyed by manufacturers’ longer-term growth and investment intentions. The findings, published in the national Manufacturing
Barometer, show that 44% of SME manufacturers had increased their investments in new premises and machinery in the past six months, up on the previous quarter’s 37%. While the number of manufacturers wanting to increase
investment in their business will hold steady in the coming months, by this time next year half of all UK SME manufacturers want to have increased investment in machinery and premises. In three years’ time, 56% anticipate investing more than
they currently do in their businesses. Simon Howes, MD of SWMAS, which published the
findings in the latest Manufacturing Barometer with partner Economic Growth Solutions, said: “We are seeing a ten-year low in plans to recruit new staff, and while this initially raises some alarm bells, it must be read in conjunction with the investment manufacturers plan to make in machinery and premises. “We found that some businesses have slowed
recruitment, and this could be in line with worries that their customers have lost confidence given the uncertainty around Brexit. “However, we really need to unpick this. The stories we
hear of manufacturers unable to find the talent they need – as revealed in findings in another recent barometer – prevail. This struggle to recruit is moving manufacturers into a new reality - they face the prospect of managing growth and meeting increasing customer demands with fewer people.
68 business network July/August 2019
“In this context their plans to focus on investment in new machinery, equipment, and premises ahead of creating new jobs, makes sense. If investment in automation and smarter equipment delivers more output with the same number of employees, a constrained labour market becomes less of an issue in the short to medium term. This presents the opportunity for manufacturers to utilise any latent capacity in their businesses and it’s an intelligent strategy as manufacturers can anticipate rewards to come if the surge in sales they predict during the next three years can be delivered.” The Manufacturing Barometer shows that in just 12
months from now the number of SME manufacturers expecting sales to increase climbs to 59%. A year after that, a whopping 73% anticipate sales increases. Three years from now and the figures start to event out a little, but still 77% forecast that their sales will have increased. Dean Barnes, Regional Director of Economic Growth Solutions, said: “The pragmatic investment strategy of the UK’s SME manufacturers implemented while they weather the Brexit storm does carry some risk. “During this period, Brexit has stunted growth and seen
customers pull up the proverbial drawbridge for some. However, some are also seeing new opportunities, taking advantage of this time to invest in new facilities and improve efficiencies. As a result, the sector is looking towards a horizon promising a potential leap in the health of their businesses once we know the direction Brexit will take and confidence returns to their customers and distributors. “All in the sector urge the Government to recognise that
the UK’s SME manufacturers can continue to have a significant, positive impact on the economy as soon as Brexit has been clarified, but support is needed to help businesses adapt to this new manufacturing landscape.”
The full Manufacturing Barometer report can be found at
www.manufacturinggrowthprogramme.co.uk
‘44% of SME manufacturers had increased their investments in new premises and machinery in the past six months’
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