Failed manufacturing firms on the rise

Posted on 26 Aug 2009 by The Manufacturer

Accountancy firm BDO Stoy Hayward estimates a high of 2,460 manufacturing firms to go out of business in 2009, over a third more than 2008.

Last year the figure was around 1,600.

Despite this, the manufacturing sector is likely to be one of the better performing areas of the economy following the downturn, BDO said. Next year it expects the number of failed firms to drop 2,090.

“There are evidently still challenging times ahead for the manufacturing sector, with high levels of business failures expected in the coming months,” says Kim Stubbs, manufacturing business restructuring partner at BDO Stoy Hayward.

“But the inventory cycle has a key role to play in the recovery and businesses that draw their destocking to a close and increase their inventories, will contribute significantly to the rebound in the industry. This, alongside reduced restraint on credit and lower sterling exchange rates, signals light at the end of the tunnel for the manufacturing sector.”

BDO arrives at its figures through its Industry Watch study. This is research it carries out across all business faculties across based on data for compulsory liquidations, creditors voluntary liquidations, administrative receiverships, administrative orders and company voluntary arrangements (CVA) from government.