English manufacturers to invest £121k average in capital equipment

Posted on 25 Feb 2014 by Victoria Fitzgerald

Small to medium sized manufacturers in England are poised to invest in capital equipment to meet expected demand in the next 12 months, the Manufacturing Advisory Service announced today.

The latest MAS Barometer’s special showed that 86% of respondents were planning to increase finance in equipment and with 80,000 firms making up the SME manufacturing community in England, this could equate to hundreds of £millions of fresh industry investment between now and 2015.

Steven Barr, Head of MAS, commented: “There is a definite feel good factor around English manufacturing at the moment and these latest figures reinforce positive reports from the Society of Motor Manufacturers and Traders (SMMT) together with encouraging Purchasing Managers’ Index (PMI) data.

“Investment is crucial if we are going to take advantage of reshoring and predicted growth in markets such as offshore wind, renewables and low carbon vehicles.”

Two thirds of firms surveyed report plans to to buy new plant and machinery, just over half will focus on upgrading IT/communications infrastructure and nearly a third intend to improve premises.

Predominant reasons driving investment plans were boosting efficiency and quality (31%), followed by developing new products/processes (30%) and extending existing capacity (22%).

Fewer than one in five companies (19%) said they planned to approach banks to fund capital equipment purchases in the next year, with manufacturers instead choosing to secure money via grants (27%) and the Regional Growth Fund (21%).

A record 864 SME manufacturers responded to the newest MAS Barometer, which provides an outline of economic conditions faced by the sector from October to December 2013.

62% of firms reported a sales boost over the last six months, equating to a 6% rise on the last report, with 76% of businesses predicting a sales increase between now and June 2014.

Business and Energy Minister, Michael Fallon, said:

“These figures point towards signs of a renaissance in manufacturing. SMEs are increasing in confidence, and looking to both recruit and invest.

“We’re committed to working closely with the manufacturing sector to provide a strong base for the recovery, and create growth for the future.”

Today’s results mark an all time high across the whole range of performance indicators in the MAS Barometer, as well as, revealing that more than half of English manufacturers are preparing to take on more staff over the next six months, a 14% rise on the previous report.

Steven Barr added: “The employment data makes for very interesting reading. Despite previous Barometers showing optimism in sales, investment and new technology, the number of firms planning to recruit has remained fairly consistent at around 40% over the past year.

“This was understood to be because companies were retaining staff during the slowdown in the hope that volumes would return. With so many firms confident of growth it could be that manufacturers are now looking to increase capability and capacity, or perhaps are looking to attract employees with different skills.

“The significant question now is do we have enough people to fill these positions or will it be a case of growing capability through apprenticeships and graduate recruitment?”

He concluded: “Our expert MAS Advisors are working with companies on their long-term strategies and skills is one of the biggest issues they are facing. We can help with planning recruitment policies and embedding skills, not to mention referring them to other relevant business support services.”