manufacturing


2019/20 MHA Manufacturing & Engineering Report


Te leading association of independent accountancy firms, MHA have been providing an insight into the UK’s manufacturing and engineering landscape over the past 8 years with their annual Manufacturing and Engineering Report. Drawing on national and regional insights from over 1,000 businesses in the sector, the report reveals that many manufacturers continue to deliver growth and demonstrate resilience, despite the ongoing uncertainty in the operating environment.


Revenue Growth


UK manufacturing outperformed the economy as a whole in 2017, due mainly to a boost in competitiveness from the depreciation of sterling and an acceleration in global activity. However this increase has faded as global growth has slowed. While revenue has grown year on year, 2017 enjoyed growth of 11.2% compared to 4.1% in 2018, with further analysis revealing that much of that growth is at the cost of reducing margins. At the same time, although gross profit has increased in sterling terms, it has fallen in % terms from 22.1% to 21.4% between 2016 and 2018.


The analysis indicates that an average manufacturing business through the start of 2019 would feel like they are working harder for marginally less returns.


Prediction for the future


Overall, 70% of businesses are expecting to see growth in the next 12 months (71% last year), of that 13% are expecting 10+% growth (a 4% increase on last year), leaving 30% anticipating flat or no growth, the same as predicted last year.


Key findings What our clients said:


Revenue has grown year on year although growth decreased


4.11% 2018


Borrowing down 58%


11.22% 2017


looking at 2019, businesses are holding onto stock as a result of Brexit


Growth in Net Assets risen from 9.97bn 2017 to


£10.49bn 2018


68%


said they have measures in place to reduce their Environmental Impact in the future.


Brexit


61% of businesses have a Brexit strategy in place, unsurprisingly this has almost doubled from last year (34%). Of those with a strategy in place 46% believe the impact will be limited, while 15% sense the potential impacts are extensive. 39% feel they cannot plan until they know more regarding the outcome of negotiations.


It is interesting to note that we have seen evidence that some companies have raised inventory at certain points over the last two years due to Brexit uncertainty, with a pick up before each of the planned Brexit dates as companies prepared for the possibility of ‘no deal’ followed by some rundown afterwards when Brexit was delayed.


In terms of planning, 82% of businesses stated they have evaluated risk in their supply chain. We asked what steps are being taken to address the identified risks and found that 32% have sought relevant guarantees from suppliers, 31% have made changes to their supply chain and 26% don’t feel there is anything that can be done to reduce risk. Only 11% of respondents have secured Authorised Economic Operator (AEO) status to reduce potential delays at customs. As changes to customs become imminent, we suggest affected business should consider AEO status.


Barriers to growth


26% 22% 19%


cited global economic conditions.


stated recruiting skilled staff.


had concerns around Brexit and future trading tariffs.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40