The Finance Flow: Engineers bullish about approach to lending

AEROSPACE, precision engineering and automotive businesses are among the most optimistic about positive changes in the flow of finance, a new report suggests.

Technology, media and telecoms firms, together with healthcare business are similarly enthusiastic, Grant Thornton’s latest Finance Flow study concludes.

All this week, TheBusinessDesk.com, in association with Grant Thornton, is looking at how the flow of finance is likely to affect the growth plans of the vital mid-market sector.
Industrials and chemicals businesses are the most polarised, with large numbers seeing both a worsening and improvement in the flow of finance.

Retailers are the least optimistic, with most gloomy about any return to pre-recession lending, while the professional services community is hedging its bets, the report concludes.

To read more about the flow of finance into the mid-market sector download a free copy of Grant Thornton The Finance Flow Supplement

Ian Wilson, partner, corporate finance at Grant Thornton in Birmingham, said: “The divergence of opinion among respondents in the industrials and chemicals sector reflects the disparity between segments such as aerospace, precision engineering and automotive, which have shown strong growth in recent quarters, and those which are experiencing a slower recovery from the impact of recession, such as chemicals and electronics.”

The reaction of the engineering and manufacturing sector is a positive one for the West Midlands, which contains a high proportion of such businesses and suggests the region may be a little more optimistic than other areas of the country.

The region is also home to a significant number of so-called TMT companies, which include IT, software and gaming firms.

The report concludes the approach taken by IT and software businesses towards long-term earnings and contractual relationships made them attractive propositions for senior lenders and private equity firms.

“Within these areas, a niche that is especially bullish is the IT and software support sub-sector focusing on financial services organisations. Activity here is being driven by the rapidly increasing burden of regulation and growing levels of outsourcing,” states the report.

In contrast, one retailer is quoted as saying: “I think we could be looking at another couple of years before the banks begin actively lending at anywhere near the levels of the previous 12 to 18 months.”

The report concludes the sector is still feeling the pinch, with low consumer  confidence, high inflation, public sector cutbacks and wage restraints all affecting the sector. Analysts believe that unless the sector has a positive festive period, many retailers will struggle come January.

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