UK news: August 2012
Most smaller manufacturers in England expect orders to grow
A survey of more than 700 smaller manufacturers in England has revealed that more than half (53%) expect an upturn of orders before the end of 2012, with a similar proportion reporting that their orders have grown in the past six months.
The survey – the second in a series of quarterly “national barometer” polls conducted by the Government-funded Manufacturing Advisory Service (MAS) – also reveals that a third of English manufacturing SMEs (smaller and mid-sized enterprises) expect to create new jobs, while 71% are looking to boost their turnover through exporting in the next 18 months.
In line with other recent surveys, there appears to be a softening in the market, with only 40% of respondents seeing an increase in enquiries, compared with 49% in the previous poll. The number of companies considering investing in new machinery and premises over the coming six months has also dropped, from 44% to 38%.
“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,” comments MAS area director, David Caddle. “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.
“However, we have to make sure we don’t talk ourselves into another downturn,” he adds, pointing out that the quarterly poll gives a smoother picture of sentiment than monthly surveys that can be swayed by external influences, such as the Queen`s Jubilee. “The majority are saying to us they are growing and expect this to continue over the next six months.”
According to UK business minister Mark Prisk, the survey “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.”
The MAS barometer 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. Together, the companies polled represent more than 28,000 employees.
In terms of manufacturing issues, their biggest worry is securing competitive production costs (50%), followed by after-sales support (19%) and meeting international standards (14%).
Despite the economic turmoil in the Euro-zone, 71% of the firms surveyed want to boost their international sales, with more than one in ten expecting to raise turnover by at least 50% by the end of the year. They say that the biggest challenge to succeeding overseas is being able to generate sales (41%), followed by choosing a suitable agent/distributor (17%) and fluctuations in exchange rates (13%).
One of the SMEs surveyed, the Midlands-based precision component manufacturer Brandauer, has secured £2m of new orders in the past six months and, following £750,000 investment in two high-speed presses, is hoping to exceed £10m in sales by the end of 2013.
“This year has been quite static so far, with the new contracts replacing some of the projects that have come to a natural end,” reports Brandauer’s sales and marketing director, Rowan Crozier. “We are definitely seeing softening in certain sectors, as OEMs 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 adds. “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 Euro-zone 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.”