State of the Region 2012: Confidence key as outlook remains uncertain

MORE than 90% of Yorkshire business leaders are no more confident than they were 12 months ago about the state of the UK economy.

The view is compounded further looking ahead to 2012, with the majority (47%) expecting conditions to get worse and 44% expecting things to stay the same.

Just 9% are expecting to see an upturn in the economy, down from the 28% of Yorkshire respondents who took part in TheBusinessDesk.com’s State of the Region survey last year.

The comprehensive survey has been completed by hundreds of business people across Yorkshire, the North West and West Midlands.

The survey, run for the third year, was compiled with support from lead sponsor DLA Piper, and supported by PwC and the CBI.

Despite the gloomy outlook for the economy, more than half of people see government spending cuts as stabilising and “painful but necessary”.

Three-fifths said they expected bank lending levels to remain about the same in 2012 with only 14% saying they expected bank lending to fall.

Richard May, managing partner at DLA Piper in Sheffield, said: “As 2011 drew to a close it became increasingly evident that hopes for a 2012 recovery were looking to be a false dawn.

“However, in the face of this grim reality, Yorkshire businesses are showing a determination to reassess their strategies and take decisive action rather than ‘wait it out’ until conditions improve around them.

“A large proportion declared their intention to engage in some form of transactional activity in 2012, with 30% expecting to make acquisitions and a quarter looking to refinancing or fundraising activity.”

Stuart Warriner, corporate finance partner at PwC in Leeds, said: “While access to finance remains an issue, many private companies in the region say they are likely to consider an acquisition in 2012 and slightly more are expecting to refinance some or all of their debt.

“Given the sluggishness of the wider economy, acquisitions will form an essential part of corporate growth strategies in 2012 and beyond but, with currency and banking crises impacting across Europe, companies must ensure they secure their debt facilities to enable growth to continue.”

Case Study: DGP Intelsius

DGP Intelsius is looking to defy the gloom surrounding the global economy with ambitious plans to quadruple turnover in three years.

The company, based at Elvington near York, assembles and distributes temperature-controlled packaging used to transport medical samples and drugs.

Finance director Alastair Harries, who took part in our State of the Region survey 2012, said: “We are looking to grow the business significantly. One of our major markets is pharmaceuticals and as that sector increasingly focuses on bioactive drugs they obviously have a massive  temperature controlled need and we are looking to capitalise on that.”

In addition to its UK base, the company has operations around the world including subsidiaries in the US and India as well as a joint venture in Malaysia.

“We don’t have large revenue numbers in the US at the moment but it’s the biggest market so that’s an area of growth for us and of course China is a massive emerging market moving from traditional medicines to Western medicines. Pharmaceuticals companies are investing hugely in China for research and development and production which means a high requirement for our services.”

One of the major issues facing the company is access to broadband from their relatively rural location.

“We are in the country and therefore our broadband speed is limited. We are not big enough for BT  to lay fibre down to our door. It can mean we struggle when we are sending large data files backwards and forwards to America,” added Mr Harries.

Tomorrow: The regions compared