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Manufacturers still growing according to Barometer

Manufacturing SMEs in England are still reporting increased sales and predicting future growth despite recent reports of an industry downturn.

53% of respondents to the latest Manufacturing Advisory Service (MAS) National Barometer have seen orders grow in the last six months with the same number (53%) anticipating a further upturn between now and the end of the year.

A third of the companies surveyed are looking to create new jobs, 55% are expecting the size of their workforce to stay the same and 71% are looking to boost their turnover through exporting in the next eighteen months.

In line with recent surveys, there does appear to be a softening in the marketplace with only 40% of respondents seeing an increase in enquiries, compared with 49% in the last Barometer.

The number of companies considering investment in new machinery and premises over the next six months is also down from 44% to 38%.

MAS’ Rachel Eade commented: “The results are still showing positive signs of growth and expansion, although there are indications among SME manufacturers in England of a more cautious outlook going forward.”

“This is not unexpected when you consider the recent economic forecasts and, historically, it takes a little longer for the slowdown to cascade its way down the supply chain and to the smaller companies.”

She continued: “However, we have to make sure we don’t talk ourselves into another downturn. The Barometer features responses from key decision makers at over 700 companies, representing more than 28,000 employees. It is carried out quarterly, giving us a smoother picture of sentiment as opposed to some monthly findings that can be swayed by external influences, such as the Jubilee.

“And the majority are saying to us they are growing and expect this to continue over the next six months.”

Business Minister Mark Prisk said: “This latest MAS Barometer shows that many small manufacturing firms across the UK are growing and expect to continue to grow despite the challenging wider economic environment.

“The Government is committed to helping manufacturers make the most of the opportunities for growth and job creation through our continued investment in MAS.”

This is the second National Barometer conducted by MAS and provides a snapshot of trends in English manufacturing SMEs from April to June 2012, as well as an overview of economic conditions and issues faced by the sector.

Export was the specialist focus for this report and, despite turmoil within the Eurozone, 71% of firms are aspiring to increase international orders, with more than one in ten expecting to boost turnover by 50% between now and 2013.

41% believe the biggest challenge to succeeding overseas is being able to generate sales, followed by selecting an agent/distributor (17%) and fluctuations in exchange rates (13%).

In terms of manufacturing issues, securing competitive production costs was listed as the biggest worry (50%), with after sales support (19%) and meeting different international standards (14%) the other most common concerns.

Rachel went on to add: “Exporting has been a key driver in the upsurge in manufacturing and this shows no signs of changing, even with the Eurozone in turmoil.

“Securing competitive production costs against global rivals has been a long-term issue and one MAS continues to help SMEs with through on-the-ground assistance and specialist workshops.

“We’d also encourage manufacturers to fully utilise the network of support in place to help them succeed overseas, including tapping into support from ourselves, UK Trade & Investment, Society for Motor Manufacturers and Traders (SMMT), ADS (Aerospace Defence Security) and the world class Universities we have in England.”

Brandauer, which employs 52 people at its factory in Birmingham, was one of the companies questioned.

The precision component manufacturer has secured £2m of new orders over the last six months and, following £750,000 investment in two high-speed presses, is looking to break £10m by the end of 2013.

Rowan Crozier, Sales and Marketing Director, commented:

“This year has been quite static so far, with the new contracts replacing some of the projects that have come to a natural end. We are definitely seeing softening in certain sectors, as the Original Equipment Manufacturers de-stock and put investment plans on hold.

“With automation and tooling for new projects in the environmental and automotive electronic sectors currently going through the sample approval stage, we are budgeting for significant growth over the remainder of this financial year.”

He continued: “Nearly 80% of our turnover is export and the majority is for China and the US, so we haven’t really been affected by the Eurozone crisis. I feel that English manufacturers will have to broaden their horizons; there’s a whole new world of potential clients out there in countries outside our traditional markets.”

MAS, which is funded by the Department for Business, Innovation and Skills (BIS), works for manufacturers and through experienced advisors can help shape strategy, create new products, reduce waste and review supply chains.

Companies can take advantage of a free review that identifies key priority areas and funding is available for improvement projects focused on increasing efficiency, developing new products, strengthening supply chains and boosting sales.

This was posted in Bdaily's Members' News section by Russ Cockburn .