Manufacturing SMEs predict growth in latest MAS Barometer

Posted on 5 Nov 2012

Manufacturing SMEs in England are predicting an increase in sales over the next six months according to the latest Manufacturing Advisory Service Barometer.

Fifty-five per cent of the 607 companies questioned expect to grow between now and March 2013, with 41% of firms set to boost investment in plant and machinery. There was also a moderate increase in those planning to spend on new technology (38%).

This cautious optimism comes after a slight softening in the marketplace that has seen the number of businesses reporting increased sales drop to just 45%, down nearly 8% against the previous survey.

As part of the Special Focus, the Barometer also aimed to find out what sectors SMEs are selling into, with the findings showing materials/general engineering as the most popular (42%), closely followed by automotive (39%) and defence (35%).

When asked about future sales growth to 2016, aerospace, marine, off shore wind and rail appear to be attractive propositions for companies looking to increase moderate sales to a significant level.

Lorraine Holmes, area director for MAS, commented: “It’s reassuring to see more SMEs are expecting to increase their sales going forward and this despite a slight fall over the last six months. Manufacturers have been reporting fluctuating demand and softening in certain sectors so to see the renewed optimism suggests many believe these markets are coming back on stream.”

Business Minister Michael Fallon said: “It’s encouraging to hear of the optimism amongst manufacturing SMEs in this Barometer. Of course, these are still challenging times, but the recent GDP output is the latest sign yet that the wider economy is starting to recover.”

This is the third National Barometer conducted by MAS and provides a snapshot of trends in English manufacturing SMEs from July to September 2012, as well as an overview of economic conditions and issues faced by the sector.

Companies said that market knowledge was the biggest challenge to entering seven of the twelve sectors listed (aerospace, chemicals, electronics, marine, off shore wind, pharmaceutical and rail), with material costs the major concern for firms looking to get involved in food and materials/engineering.

Regulation, unsurprisingly, is the pressing issue for defence and nuclear, while 21% of respondents said production costs were the barrier to entry in securing automotive sales.