West Midlands manufacturers ‘among most financially stable’
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West Midlands manufacturing companies are continuing to outperform the majority of their regional counterparts as new research reveals that they are among the most financially stable in the UK.
May figures compiled by insolvency and restructuring body R3’s Midlands branch, using Bureau Van Dijk’s Fame database, show that around one-in-three – 32.2% – manufacturers in the region are at higher than normal risk of insolvency. This is one of the lowest percentages in the UK and equates to 6,023 local businesses.
Only Northern Ireland and London have lower proportions of manufacturing companies at elevated risk of insolvency, at 31.6% and 31.7% respectively. Wales has the highest percentage at 39.1%, which is over four points above the UK average of 34.9%.
In contrast, the news is less positive for the West Midlands retail sector, which has a higher proportion of businesses at above average risk than many of its regional counterparts. Almost two-in-five – 37.4% – are at above normal risk of insolvency, representing 6,409 local retailers. This is almost two percentage points more than the UK average of 35.7%.
The May research also indicates that two-in-five West Midlands companies – 39.3% – currently have an elevated insolvency risk, which equates to 109,645 local businesses. In May 2017, the proportion was around one-in-four, or 25.1%, representing 67,762 companies.
R3 Midlands Chair Chris Radford, a partner at the Birmingham office of Gateley, said: “It is good to see the local manufacturing sector outperforming many of its peers, but even with this glimmer of positivity, it is obvious that all business sectors are facing strong challenges to their success.
“The woes of the retail sector have been widely reported of late, with several High Street names entering a statutory insolvency procedure this year. Poor trading in the first quarter of 2018 has contributed to the sector’s downturn, particularly as ever-thriftier consumers move their spending from retail to leisure.
“It is vital that retailers refrain from sticking their heads in the sand and recognise that such trends can be systemic. For example, the rise of online shopping and the subsequent need for a seamless and slick e-shop is, for many businesses, as inescapable as it is potentially profitable.
“There are few retailers who won’t need to take a strategic look at how and where they do business and the type of customers they are targeting. There is no doubt that things are tough in the marketplace, but planning ahead and speaking to a regulated and reputable adviser could make all the difference.”