Manufacturing SMEs still seeing growth but picture softening

MANUFACTURING SMEs in the West Midlands are still reporting increased sales and predicting future growth despite recent reports of an industry downturn.
 
In the latest Manufacturing Advisory Service (MAS) National Barometer, 43% of respondents to the survey said they had seen orders grow in the last six months, with 45% anticipating a further upturn between now and the end of the year.

Over a third of the companies surveyed are looking to create new jobs, 49% are expecting the size of their workforce to stay the same and 85% are looking to boost their turnover through exporting.

While the survey is more optimistic than some recent research, MAS does acknowledge that there appears to be a softening in the marketplace with only 41% of respondents witnessing an increase in enquiries, compared with 62% in the last Barometer.

The number of companies considering investment in new machinery and premises over the next six months is also down from 56% to 43%.

Rachel Eade, from MAS, commented: “The results are still showing positive signs of growth and expansion, although there are indications among SME manufacturers in the West Midlands of a more cautious outlook going forward.

“This is not unexpected when you consider the recent economic forecasts and, historically, it takes a little longer for the slowdown to cascade its way down the supply chain and to the smaller companies.”

However, she was keen to stress the positives from the survey and said people needed to be careful they did not talk themselves into another downturn.

“The National Barometer features responses from key decision makers at over 700 companies, representing more than 28,000 employees. It is carried out quarterly, giving us a smoother picture of sentiment as opposed to some monthly findings that can be swayed by external influences, such as the Jubilee,” she said.

“And the majority are saying to us they are growing and expect this to continue over the next six months.”

Business Minister Mark Prisk said: “This latest MAS Barometer shows that many small manufacturing firms across the UK are growing and expect to continue to grow despite the challenging wider economic environment.

“The Government is committed to helping manufacturers make the most of the opportunities for growth and job creation through our continued investment in MAS.”  
This is the second National Barometer conducted by MAS and provides a snapshot of trends in English manufacturing SMEs from April to June 2012, as well as an overview of economic conditions and issues faced by the sector.

Export was the specialist focus for the latest report and, despite turmoil within the Eurozone, 85% of firms are aspiring to increase international orders, with more than one in ten expecting to boost turnover by 25% or more between now and 2013.

Almost half (43%) believe the biggest challenge to succeeding overseas is being able to generate sales, followed by fluctuations in exchange rates (11%) and getting paid (10%).
 
In terms of manufacturing issues, securing competitive production costs was listed as the biggest worry (42%), with after sales support (18%) and meeting different international standards and design modifications (both 7%) the other most common concerns.

“Exporting has been a key driver in the upsurge in manufacturing and this shows no signs of changing, even with the Eurozone in turmoil,” added Ms Eade, left.

“Securing competitive production costs against global rivals has been a long-term issue and one MAS continues to help SMEs with through on-the-ground assistance and specialist workshops.”

The body is encouraging firms to seek out exports and had advised them to tap into a support network that includes in addition to MAS: UK Trade & Investment, Society for Motor Manufacturers and Traders (SMMT), ADS (Aerospace Defence Security) and the universities.

Brandauer, which employs 52 people at its factory in Birmingham, was one of the companies questioned.
 
The precision component manufacturer has secured £2m of new customer orders over the last six months and, following £750,000 investment in two high-speed presses, is looking to break £10m by the end of 2013.
 
Rowan Crozier, Sales and Marketing Director, commented: “This year has been quite static so far, with the new contracts replacing some of the projects that have come to a natural end. We are definitely seeing softening in certain sectors, as the Original Equipment Manufacturers de-stock and put investment plans on hold.
 
“With automation and tooling for new projects in the environmental and automotive electronic sectors currently going through the sample approval stage, we are budgeting for significant growth over the remainder of this financial year.”