Partner Article

Positive signs for manufacturers

THE UK manufacturing sector is emerging from the recession stronger and leaner than ever, according to a recent survey from PwC.

PwC found that leading manufacturing businesses were not only able to improve working capital by up to 15% in the recession, but also to improve gross margins by 1.5% through cost saving initiatives.

Bill MacLeod, partner at PwC in Newcastle, said: “Although UK manufacturing has just experienced one of its worst periods of decline and turmoil, the majority of the companies we spoke to used it as an opportunity to carry out radical restructuring, cost reduction, improve agility and flexibility, renegotiate contracts and pension liabilities.

“Potential acquisitions or divestitures are actively being evaluated in order to strengthen market position and take advantage of opportunities such as acquisitions of strategically valuable distressed assets in the market.

PwC found that companies have become more efficient by preparing for a range of potential outcomes through robust scenario planning for up to 10%, 20% and 30% declines in revenue.

They have also been able to align incentives to cash and working capital performance to ensure they were ‘top-of-the-mind’ within management teams.

Meanwhile, aealigning their manufacturing base including accelerating the shift of either manufacturing plants and/or commodity products to Lower Cost Countries (LCCs) has also helped.

This was posted in Bdaily's Members' News section by Ruth Mitchell .