Manufacturers ready to invest says report

INVESTING on new products and innovating is a major priority for the next year for the majority of manufacturers, a new survey has suggested.

While 73% of those taking part in the Annual Manufacturing Report carried out by The Manufacturer Magazine and Barclays Corporate were looking to invest, 64% were still downbeat on economic prospects for manufacturing next year.

The report, which surveys more than 120 manufacturers each year, found that compared with last year there had been an improvement in confidence, with fewer looking to shave costs (54%) compared with 60% in the previous year.

From an investment perspective  65% are planning to buy new computer systems/software (55% in 2009), while 60% intend to spend on new machine tools up from 47% last year.

Financially, the amount being invested is also substantial, with 60% of respondents that plan to invest in machine tools indicating that they will be spending at least £100,000.

Graeme Allinson, head of manufacturing, transport and logistics at Barclays Corporate, said the results showed that despite economic uncertainty there was a general acceptance in the industry that meaningful investment could no longer be put off.

“There is an opportunity cost associated with putting off investment; maintenance costs and lagging behind in efficiency compared with competitors eventually outweigh the direct benefit.

“There is also only so long an entrepreneurial management team want to sit on their hands, and this drive to grow may explain some of the disconnect between economic outlook and investment intentions within the industry.”

However, this forecast jump in investment is not set to be matched by deals, with just 2% seeing acquisitions as their main driver of growth.