Manufacturers target home comforts to boost growth

Posted on 9 Sep 2014 by Victoria Fitzgerald

Small manufacturers in England are set to make the most of a strengthening UK economy by focusing on domestic markets for their future growth it was revealed today.

Over two thirds (67%) of companies questioned in the latest Manufacturing Advisory Service (MAS) Barometer feel that increasing sales at home offered them the best chance to expand.

This was followed by new product development, improving production processes and over a third of firms (36%) who are focused on boosting export performance.

There also appears to be significant confidence in longer-term growth as respondents predict a 64% rise in collective turnover and staffing levels to increase by 32% over the next four years.

The latter could equate to tens of thousands of new jobs across the SME manufacturing base.

“There is significant confidence in the domestic marketplace at the moment, a further signal that the recovery has taken hold,” explained Steven Barr, head of the Manufacturing Advisory Service.

“We’ve seen unrivalled investment in the UK automotive industry and that is cascading down the supply chain and creating new opportunities. Our reputation for low carbon advancement should also be another growth sector and I’m sure our manufacturing SMEs will be in line to take advantage of major infrastructure projects, such as Hinkley Point in Somerset and High Speed Rail.

“As part of the long-term focus, we also asked respondents about their biggest strengths, with the quality of senior leadership teams (68%) coming out on top, followed by innovative products (66%) and robust strategy (61%).

“It was not surprising to discover that the biggest challenge is access to skills (71%), whilst marketing and creating effective sales channels were the next major concerns. We will work with partners like GrowthAccelerator and SEMTA to help SME manufacturers overcome these challenges.”

Business Minister Matthew Hancock said: “This is yet more good news for British manufacturing which shows a more balanced recovery is really taking hold now. These many thousands of jobs that promise to be unlocked in manufacturing will help families across the country and that’s the whole point of our long-term economic plan.”

The MAS Barometer is the largest survey of its kind, sharing the views of over 900 small manufacturers across England, employing more than 22,500 people and realising turnover in excess of £2.6b.

The results maintain positivity seen in previous findings, with 61% of companies increasing sales in the last six months and 76% expecting to grow between now and the end of the year – 8% and 9% improvements respectively on this time last year.

Similar to last quarter, more than half of firms (55%) are looking to recruit and create new jobs, which is a record figure and a 12% rise on 2013.

Steven continued: “Despite recent economic surveys reporting a slight dip in manufacturing performance, it appears the smaller firms are still confident of growing, especially when you compare the key performance indicators with the figures from last summer.

“Everything we monitor, including sales, future growth, jobs and investment, are all up across the board so we can see the short-term outlook is very positive. Thanks to our specific focus this quarter, we also know there is longer-term confidence and the areas of concern manufacturers need support to address.”