John Laud, relationship director in Barclays' food, drink and packaging sector, discusses his views on the industry with TM.
How do you rate Barclays’ involvement in the UK food and drink manufacturing sector?
Amongst the many subsectors of manufacturing that Barclays supports, the food and drink sector accounts for approximately 20% of our total manufacturing book. The foundations of Barclays are embedded within the food and drink sector and we still support a significant number of businesses in the sector. We have continued to support food and drink manufacturers with financing and general banking provisions throughout the recent recessionary years and are proud of our strong and leading market share.
Is the recent, widely-publicised confidence about UK manufacturing encouraging businesses to engage more actively with banks?
Yes, recently we have seen much more confidence from the companies that we work with. If you look at the last nine months, the increase in confidence has manifested itself in a larger number of businesses looking to invest in growth, which we have noticed in the rise of Capital Expenditure projects. A clear sign of confidence is that a number of corporates are looking to finance new machinery – as reported in the 2014 Annual Manufacturing Report where manufacturers indicated they would be investing in production facilities this year. In contrast to three years ago when many manufacturers were deleveraging, paying off debt and protecting their working capital, we are encouraged to see a renewed appetite for growth in the sector.
What about the flipside: is the growing confidence encouraging banks to target manufacturing more so than in recent years?
Our specialist manufacturing team has been working closely with the sector for over 13 years, so our involvement and support for the industry has been constant and longstanding. UK manufacturing has weathered the recessionary storms very well, and we have been proud to support businesses through the tough times as well as periods of growth. SME business activity, in particular, has increased at about 3% – in a sector that employs around 2.5 million people within the UK, this growth rate is significant.
How is the food and drink sector responding to its high demand for energy resources?
The rising cost of energy resources, and the concerns around environmental protection, remains a hot-topic for most industries. It is clear that the Government has taken many positive steps towards encouraging renewable energy in the UK and, more pertinent to the Food and Drink sector, many supermarkets are investing in ways to effectively manage their waste outputs. It is key for supermarkets to collaborate with their suppliers to consider more eco-friendly solutions for their businesses – looking at different energy solutions not only makes sense from a cost-base perspective, but also ensures that the sector is leading the way in supporting a greener, cleaner environment.
How is Barclays helping to change the perception of UK food and drink manufacturing, as well as driving growth in the sector?
As a relationship director who predominantly supports food and drink manufacturers, it is of the utmost importance that I can understand the businesses that I work with on a daily basis. Our specialist industry proposition allows me to focus my attention on this sector and look for appropriate solutions to help clients achieve their ambitions. It’s a sector I feel really passionate about.
There is also a lot of technological innovation being seen in the industry which is certainly driving interest amongst younger generations looking to start their careers. If we can encourage this enthusiasm for cutting-edge technology and better training for new starters, whether that is via graduate schemes or apprenticeships, the food and drink manufacturing industry will reap the benefits.