Manufacturers ‘leaner and stronger’ says PwC

THE manufacturing sector is emerging from the recession stronger and leaner than ever, according to research by business advisers PricewaterhouseCoopers.

The firm found that leading manufacturing businesses were not only able to improve working capital by up to 15% in the recession, but also to improve gross margins by 1.5% through cost saving initiatives.

David Kelly,  business recovery partner at PwC in the North West, said: “Although UK manufacturing has just experienced one of its worst periods of decline and turmoil, the majority of the companies we spoke to used it as an opportunity to carry out radical restructuring, cost reduction, improve agility and flexibility, renegotiate contracts and pension liabilities.

“Potential acquisitions or divestitures are actively being evaluated in order to strengthen market position and take advantage of opportunities such as acquisitions of strategically valuable distressed assets in the market.

Ironically, Mr Kelly believes such sensible stewardship could lead to more opportunistic takeovers from foreign companies.

“Businesses which have shown resilience and stability during the recession and emerged leaner and more efficient may now find themselves as potential takeover targets, in particular by overseas conglomerates looking to benefit from weak sterling and gain from recovery upside opportunities.”