Despite the economic difficulties, UK manufacturing is one of the most confident sectors regarding prospects over the next year, with most SME CEOs forecasting strong growth.
According to the latest research from UK private equity firm ECI Partners, 82% of manufacturing businesses expect to see turnover growth of more than 6% over the next year, while a quarter are predicting a rise of more than 20%.
Prospects for job creation are equally strong, with 79% of manufacturing CEOs expecting to add to their firm’s head count, and 24% forecasting growth in employee numbers of more than 6%. The positive outlook was detailed in ECI’s second annual Growth Survey, which questioned almost 250 chief executives across the UK.
Mark Prisk, Minister of State for Business and Enterprise, said: “It’s good news that despite a tough few months, nearly three quarters of the SMEs surveyed by ECI are looking to recruit over the next year and half expect to see substantial profit growth in that period. Up and down the country, it is Britain’s SMEs that are driving our economic recovery.”
The number of respondents expecting to grow employment went up to 74%, despite predictions of falling private sector employment from media commentators and economists. Private sector employment has already grown by more than 500,000 over the next 12 months, according to ONS data.
ECI’s findings indicate a positive trend among UK growth companies (those with a turnover between £10 million and £200 million), which employ more than 7.5 million people, accounting for more than one third of private sector jobs in the UK.
The top two drivers for turnover growth among manufacturing CEOs are seen equally as entering new geographical markets and increasing market share, with 17% each.
The most important barrier to growth in this sector, mentioned by 28% of CEOs, are macro economic conditions; however, access to finance 66% of industry CEOs expect it’s going to be difficult to raise finance in the next year (96% of the companies surveyed will source the money used for growth from their own cash flows).
Steve Tudge, managing director of ECI Partners, commented: “The latest ECI Growth Survey results are dramatic – growing SMEs are positive about the outlook for further growth in profits and employment in the coming year. Despite the barriers to growth which are principally cited as a weaker macro environment and funding constraints, we continue to be optimistic about the prospects for good mid-market companies.”