An EEF survey revealed that manufacturers have ambitious strategies but raised questions as to whether they are investing enough to deliver them.
These strategies focus on bringing new products and services to new overseas markets.
According to the survey of over 250 companies nearly nine in ten firms want to invest to improve productivity, three-quarters to adopt new technology and seven in ten to develop capacity to manufacture new products.
Firms have been upping their capital expenditure with half of companies increasing investment in the last three years and only one in ten reducing it.
The manufacturers’ organisation’s survey also identified the biggest barriers to investment: these are demand uncertainty, cashflow, the desire to pay down debt and tax and pension fund liabilities.
According to EEF, the current trend of increased investment is not enough to make up for a decade of decline.
The report showed that a fifth of manufacturers feel they are falling behind their international competitors. In addition a third said the gap between what they want to invest and what they actually invest is growing.
Closing the gap is not easy, with many manufacturers facing challenges in accessing finance on the right terms and the need to cover pension liabilities.
In addition, competition for investment from locations across the globe is increasing and many manufacturers are foreign-owned and therefore face challenges in getting approval from parent companies.
EEF chief executive Terry Scuoler said: “We need to close the gap between ambition and reality by overcoming the barriers to investment facing manufacturers and by giving them every reason to invest here rather than abroad.
“The global race for business investment is becoming ever more intense and winning it won’t be easy. The starting point for government must be redoubling its efforts to create an environment that gives industry the certainty and stability it needs to make long-term investments.”
At the heart of a more predictable business environment must be a long-term strategy that focuses on manufacturing; this would have to provide a competitive tax system for companies investing in the UK; improved access to external finance; increased availability of suitably qualified staff; competitive energy costs; and more support to commercialise technology.
EEF will host its second annual National Manufacturing Conference tomorrow, March 5th, in London – in association with The Manufacturer.
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