Manufacturers buck insolvency fears trend

Posted on 14 Apr 2011 by The Manufacturer

The number of manufacturing companies deemed to be in financial distress dropped in the first quarter of 2011 – significantly in some areas – although the number across all business sectors went up.

Insolvency experts Begbies Traynor’s Red Flag Alert rates a company has having ‘significant’ financial problems if they are facing court action or ‘average, poor, very poor, insolvent or out of date’ accounts. Companies with County Court Judgements totalling £5,000 or more or those who have been issued with winding up orders are rated as ‘critical’.

The latest figures show the number of food and drink manufacturing companies in the ‘significant’ or ‘critical’ categories was 42 per cent lower in the first three months of this year compared to the final three months of 2010.
There were 14 per cent less automotive companies in difficulty, 11 per cent less print and packaging and 15 per cent less in all other manufacturing sectors.

Conversely, there was a 26 per cent increase from Q4 2010 to Q1 2011 when all business types were taken into account to a total of 186,554 firms.

Begbies Traynor said the industries most dependent on discretionary spending are currently registering the highest levels of distress which accounts in part for manufacturing’s reversal of the trend.