Member Article

Confidence grows in manufacturing and engineering sectors

The manufacturing and engineering sectors have demonstrated “encouragingly high” business confidence according to research from MHA Macintyre Hudson.

One third of the 145 respondents predict growth of 10%, although almost half expressed concern over the continuing eurozone crisis impacting the economy.

The survey reaffirmed the reliance of UK manufacturers on the Eurozone, as almost 90% of businesses cite it as an export location.

Despite competition from low-cost producers, Asia was also identified as a key export location, marginally coming ahead of North America.

Mike Brown, MHA Chairman said: “It’s clear from this survey that confidence for growth in manufacturing is improving with the sector looking at new and innovative ways to manage uncertainty in the Eurozone as well as rising production costs.

“Within the UK economy, more guidance and support at the highest level is necessary to ensure growth for this vital sector.

“We know the Government has expressed a commitment to rebalancing the role of manufacturing in terms of contributing to GDP, but this survey shows immediate and extensive action is necessary to deliver this.

“We would urge the Government to consider a wider national manufacturing strategy and increased awareness in the support currently available to support the sector and ensure it maintains its place as a leading player in the global economy.”

The report featured comment from Nick Baird, CEO of UKTI, who have worked to encourage SMEs to explore exporting as a means to achieve growth.

He said: This is very encouraging and reflects the priorities of UK Trade & Investment’s strategy. SMEs are crucial to re-balancing the economy.

“In 2011 SMEs accounted for more than half of employment and almost half of turnover in the UK private sector.

“But we need even more SMEs to export. Exporters contribute 60 per cent of the UK’s productivity growth.”

The research also showed nearly half of companies were planning to increase capital expenditure in 2012 and 60% of manufacturing businesses intended to take on apprentices or trainees.

Investment outlook for research and development was low, with a quarter of businesses having no plans for R&D spend in 2012, while of the rest, around 35% planned to spend between 1-2% of their turnover.

Mr Brown added: “While the effects of the recession have clearly put pressure on investment such as R&D spend, we would urge manufacturing businesses to focus on the significant benefits of long term competitiveness and in the shorter term, tax credits in this area.

“Reduced investment at this key point could threaten competitiveness in the longer term. Recruiting and building the right talent across the sector is very much a part of this.”

Pricing and costs emerged as contentious issue as 61% believed they could pass supply chain increased on to their customers, while 39% felt unable to do so.

This was posted in Bdaily's Members' News section by Tom Keighley .