Region’s manufacturing and construction businesses most financially secure in the UK

West Midlands manufacturing and construction businesses are amongst the most financially secure of their UK regional counterparts, insolvency body R3 has claimed.

February figures compiled using Bureau Van Dijk’s Fame database, show that fewer than one in five – 19.6% – manufacturing businesses in the region are at higher than normal risk of insolvency, a percentage bettered only by Yorkshire and Northern Ireland.

The West Midlands construction sector is also amongst the UK’s top regional performers, with fewer than one in four – 24.3% – businesses operating with an above average risk of insolvency, a percentage surpassed only by the East Midlands and Northern Ireland.

In contrast, the news is less positive for the regional tourism sector, which is struggling more than any of its regional counterparts. Around one in three firms – 32.1% – are at higher than normal risk of insolvency, which is four points above the UK average of 28.1%.

Further West Midlands business sectors less financially secure than the UK average include technology and IT, transport and haulage, agriculture and hotels.

Commenting on the research, R3 Midlands chairman Chris Radford, a partner at the Birmingham office of law firm Gateley, said: “These statistics demonstrate that we remain in a state of regional economic flux. Where certain sectors are moving towards recovery, there are others which still have significant hurdles to overcome.

“Positive steps are being made by the Government which should go some way to supporting regional recovery. For example, new guidance on late payment reporting for large businesses has just been published and welcomed by R3. We hope it will encourage better practice in making prompt payments to suppliers and safeguard the cash flow of our SMEs.”

Mr Radford also pointed out that the region’s businesses are currently enjoying a significant safety net compared to the pre-financial crisis economy.

He said: “Creditors, particularly banks, are much more patient with their borrowers and companies are benefitting from record low borrowing costs. An increased focus by the insolvency and restructuring profession on early intervention has also helped local businesses avoid formal insolvency procedures.

“There still remains, however, a pressing need for business owners to monitor finances carefully and to plan for all eventualities. If cash flow becomes a major challenge, it’s imperative to seek professional advice sooner rather than later.”