SME manufacturers’ sales expectations hit three-year high

Posted on 27 Feb 2018 by Jonny Williamson

SMEs must improve productivity by unlocking ‘their own hidden potential’ if sales and profit growth are to meet expectations – according to the latest National Manufacturing Barometer.

SME manufacturers must improve productivity by unlocking their own hidden potential.
SME manufacturers must improve productivity by unlocking their own hidden potential.

The quarterly survey conducted by SWMAS (part of Exelin Group) in partnership with Economic Growth Solutions (EGS) invited 320 manufacturing industry leaders to discuss performance.

The special focus of the questionnaire was on productivity and the extent to which it is engrained in manufacturing business culture.

An overwhelming majority of respondents (72%) said they anticipate an increase in sales in the next six months – the highest figure recorded for nearly three years.

In a further indication of confidence in the sector, 59% of respondents said they were expecting increased profits over the coming six months.

However, as only 45% of manufacturers actually experienced an increase profits in the second half of 2017, the gap between anticipated sales growth and actual recent improvements in profits continues to raise questions about productivity, especially the ability of manufacturers to meet their own growth targets.

Encouragingly, more than half (56%) of manufacturers indicated in the Barometer that they aimed to deliver against their growth targets by investing in machinery and premises; a rise of 13% on the last report.

Almost 50% of respondents plan to recruit new staff

Furthermore, 48% of respondents to the latest survey said they planned to recruit new staff, which is only 2% higher than the same time last year. This suggests that improving productivity through the existing workforce and facilities remains the key focus.

The latest Manufacturing Barometer survey also explored the extent to which manufacturers have integrated productivity into their business and workplace culture.

Around 70% are confident that productivity is engrained at a strategic level, and championed by business leaders. However, almost half indicated they would like to achieve better, and sustainable, productivity improvements, pointing to the need to improve engagement with staff to deliver and sustain change.

Michael Gibbs, managing director of Redruth-based spring manufacturer European Springs & Pressings, said: “These findings speak volumes. To have two thirds of UK SME’s forecasting continual growth in their order books – alongside increasing profits – confirms the UK’s recent rise up the rankings to the eighth largest manufacturer in the world.

“It’s encouraging to see the sector also focuses on efficiencies through management and lean manufacturing processes to counter external price rises. We’re now heavily investing in new premises, personnel, machinery and efficiency systems in a determined bid to see today’s manufacturing trend continue.”

Peter Bruch, managing director of Birmingham-based precision components manufacturer AE Aerospace, concluded: “We have focused on productivity improvements since our Management Buy-Out four years ago.

“The biggest difference has been the investment in our people and systems, the team understand what work they need to do, why and how it benefits them to improve what we do.”

The Manufacturing Barometer is the largest survey conducted of SME manufacturers in the UK and asks senior decision makers for their views on factors influencing business performance and the future of the sector.

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