The impact of recession on the manufacturing industry last year materialised as a twelve per cent rise in firms falling into administration, Deloitte has revealed.
In total, 526 manufacturing companies fell into administration during 2009 which was 17 per cent of the total number in the UK across all sectors. Only the construction industry suffered more (20 per cent).
In contrast, total UK administrations across all sectors fell by two per cent down on 2008 figures (3,245 to 3,188).
Things got better as the year went on for manufacturing though. Administrations in quarter four were 32 per cent down on quarter three (128 to 87).
Despite this trend, Ross James, manufacturing partner at Deloitte, warned this year could still be tough.
“At this stage it is difficult to predict whether the total number of manufacturing administrations will increase in 2010,” he said. “Primarily it centres on whether there is a sustained recovery in demand. All eyes remain focused on whether there will be a double dip in the economic growth – if so it is inevitable that there will be more manufacturers forced into administration. However, hopefully we will see the return of confidence and a sustainable increase in demand so it doesn’t come to that.
“Recent consumer spending data has been quite upbeat. Hopefully this positive sentiment will filter through to the manufacturing sector and orders will increase. This would also help manufacturers of machinery and tooling, who have been badly hit in the last year or so by other manufacturers cutting capital expenditure.”
On Monday, insolvency experts Begbies Traynor revealed that the number of manufacturers with pressing financial problems rose at the end of last year. However, the number of those with ‘critical’ problems fell. Click here to read this story on themanufacturer.com.