Growth prospects for West Midland manufacturers reach 12-month high

GROWTH prospects amongst West Midlands manufacturing SMEs is at a 12-month high with almost three-quarters of companies in the region expected to increase sales during the next six months.

The encouraging findings have been detailed in the latest Manufacturing Advisory Service (MAS) Barometer, which is published today.

The barometer showed that in terms of recent performance 51% of the 107 firms who responded to the survey reported a rise in sales turnover, up 10% on previous quarter. In addition, almost all (92%) of those responding said they were looking to take on staff or keep workforce levels the same.

When it comes to investment, almost half (46%) are planning to spend on new technologies and 60% intend to invest in new machinery and premises. This makes the West Midlands the national hotspot for future SME investment.

This overwhelming optimism is present despite ongoing barriers causing SME manufacturers to turn down new opportunities.

In response to the barometer’s special focus, more than half of firms (57%) quoted poor profit margins as the main issue, followed by an inability to meet lead times (27%) and design specification (24%).

Lorraine Holmes, Area Director for MAS in the North and West, said: “If you compare findings with the similar period in 2012, you will see that firms are a lot more optimistic, with most key performance responses measured showing positive improvements.

“There appears to be a greater appetite from SMEs for investment in order to remain competitive and I think we are also seeing a desire to create jobs to meet expected demand.”

She said the barriers to new opportunities were interesting with poor profit margins and lead times both painting a potential picture of unrealistic customer expectations.

“An inability to meet design specification and issues with equipment capability were also quoted as possible barriers and this could underline the renewed desire for investment in new machinery and technology,” she added.

Companies said that turnover would increase – on average – by 23% if they could overcome the three main barriers quoted, while just under half admitted that new clients accounted for up to 25% of the missed opportunities.

“What we are seeing is that West Midlands manufacturers have made massive strides forward in implementing best practice production techniques and can compete with the best in terms of quality, cost and delivery.

“They now need support on longer-term strategies and in developing new products and markets and this is being reflected in the assistance MAS is providing,” added Ms Holmes.

Arrowsmith Engineering is one of the companies reflecting the barometer trends, with strong growth in the aerospace sector underpinning an increase in year-on-year sales.

The Coventry firm, which provides precision engine and braking components for some of the world’s leading aero tier 1s, is expecting to hit a record £3.5m turnover in 2013.

Jason Aldridge, Managing Director, said: “The key to our recent success is developing more strategic partnerships with our customers, which include the likes of Rolls Royce UK, Aero Engine Controls, Eaton Aerospace, Pattonair and Meggitt.

“This means we have started to work a lot more at the front end of a project so we can start adding value in the design and development stage, offering solutions to potentially critical manufacturing issues.”

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