West Midlands manufacturers target home comforts to boost long-term growth

Small manufacturers in the West Midlands are set to make the most of a strengthening UK economy by focusing on domestic markets for their future growth. Over three quarters (78%) of companies questioned in the latest Manufacturing Advisory Service (MAS) Barometer feel that increasing sales at home offered them the best chance to expand.

This was followed by new product development, improving production processes and 23% of firms who are focused on boosting export performance.

There also appears to be significant confidence in longer-term growth as respondents predict a 94% rise in collective turnover and staffing levels to increase by 32% over the next four years.

The latter could equate to thousands of new jobs across the SME manufacturing base.

“There is significant confidence in the domestic marketplace at the moment, a further signal that the recovery has taken hold,” explained Lorraine Holmes, Area Director of the Manufacturing Advisory Service.

“We’ve seen unrivalled investment in the UK automotive industry and that is cascading down the supply chain and creating new opportunities. Our reputation for low carbon advancement should also be another growth sector and I’m sure our manufacturing SMEs will be in line to take advantage of major infrastructure projects,such as High Speed Rail.”

She continued: “As part of the long-term focus, we also asked respondents about their biggest strengths, with the quality of senior leadership teams (65%) coming out on top, followed by efficient processes (62%) and innovative products (61%).

“It was not surprising to discover that the biggest challenge is access to skills (83%), whilst marketing and creating effective sales channels were the next major concerns. We will work with partners like Growth Accelerator and SEMTA to help SME manufacturers overcome these challenges.”

The MAS Barometer shared the views of more than 70 small manufacturers across the West Midlands, employing more than 2000 people and realising turnover in excess of £165m.

The results maintain the positivity seen in previous findings, with 63% of companies increasing sales in the last six months and 76% expecting to grow between now and the end of the year – 15% and 9% improvements respectively on this time last year.

Similar to last quarter, nearly two thirds of firms (65%) are looking to recruit and create new jobs, which is a joint record figure and a12% rise on 2013.

Lorraine continued: “Despite recent economic surveys reporting a slight dip in manufacturing performance, it appears the smaller firms are still confident of growing, especially when you compare the key performance indicators with the figures from last summer.

“Everything we monitor, including sales, future growth, jobs and investment, are all up across the board so we can see the short-term outlook is very positive. Thanks to our specific focus this quarter, we also know there is longer-term confidence and the areas of concern manufacturers need support to address.”

Conveyor Units was one of the companies questioned in the MAS Barometer and reflects the sustained confidence enjoyed by English manufacturers.

The Black-Country manufacturer of conveyor modules has grown 45% over the last twelve months, boosted by strong demand from the warehouse, distribution and post and parcel sectors.

“Our philosophy is to be highly autonomous so when other rivals were looking East for cheaper prices and increased margins we were investing in new plant and equipment at our two sites in Lye and Stourport-on-Severn,” explained Ian Bytheway, Finance Director at Conveyor Units

“This is coming home to roost now, with rising export sales and new contracts being won on a regular basis…some of this fuelled by rising online spending and increased investment from post and parcel operators to keep up with demand.”

He continued: “All of our conveyors are manufactured from raw materials and then assembled on our two sites utilising in-house equipment, including laser guided presses, laser cutters, turret punch machines and our own dedicated paint plant.”

“This has been further reinforced by recent investment in a state-of-the-art Krauss Maffei plastic injection moulding machine.”

Conveyor Units, which celebrated its 50th anniversary in 2013, has increased its workforce by 15 to 135, including 6 apprentices.

Whilst Europe has been its main international focus to date, the company is in advanced negotiations to set up a joint venture in China to manufacture conveyors for the Far East market.