Sales and investment on the rise as West Midlands’ SME manufacturers defy slowdown

Small and medium sized manufacturers (SMEs) in the West Midlands are defying predictions of a slowdown in the sector by posting increases in current and predicted sales.

62% of respondents to the latest Manufacturing Barometer* have indicated that turnover increased in the previous six months with nearly three quarters (73%) expecting further increases over the next four months.

In further positive news, 59% of firms are still looking to recruit and 56% said they were planning to increase investment in new technology…the highest figure recorded in the three-year history of the Barometer and an indication of a movement towards more advanced manufacturing.

The specialist topic this time is ‘identifying barriers to growth’. Responses revealed that the burden of regulation and finding new recruits with the right skills are the two main concerns for the region’s SME manufacturing base.

Lorraine Holmes, Area Director of the Business Growth Service’s Manufacturing Advisory Service, commented: “There have been concerns that manufacturing is slowing down, and GDP figures from the Office for National Statistics did indeed reveal a slight decline.

“I’m pleased to say that SME manufacturers are feeling more optimistic. Turnover for the last period has bounced back and the outlook for future sales appears very positive, with automotive and construction strong and new opportunities in offshore wind and nuclear opening up previously untapped markets.

“Record investment plans in technology should be welcomed. This shows companies are recognising that they need to spend in order to compete globally, offering unique processes and technologies that establish themselves on the added value chain.”

She continued: “Predicted recruitment of new staff has also remained high, although this could be due to companies not being able to find the skilled employees they need.

“Any slowdown by the bigger manufacturers will take a while to cascade down the supply chain. We have to be mindful that there might be a delayed reaction to the predicted slowdown.”

Business Minister Matthew Hancock commented: “Small businesses have been at the forefront of our economic recovery and today’s findings show no sign this is slowing down. We are committed to making Britain the best place in the world to start and grow a business, which means backing manufacturers every step of the way.

“Cutting swathes of unnecessary red tape has saved business £10billion over the last four years, our British Business Bank is unlocking funds for thousands of small businesses and our laser focus on skills has seen more than 2 million people start an apprenticeship during this Parliament.

“Our long-term economic plan is delivering and it’s clear that manufacturers are leading the way.”

The Barometer is the largest survey of its kind, reflecting the views of 79 SME manufacturers across the West Midlands, employing over 3500 people.

Over half of companies (54%) cited regulation as their biggest burden, followed by the availability of new recruits with the right skills (42%) and the ability to secure appropriate finance or investment (40%).

Only 35% said that the cashflow profile of the business hindered their future development.

“We also asked them to tell us which factors they felt supported growth,” continued Lorraine.

“Nearly three quarters (74%) feel their current business plan is important to growth, whilst the skills and expertise of the management team and a strong sales strategy both scored highly (70% and 58% respectively).”

She concluded: “What was pleasing to see was MDs praising the motivation of their workforce as a significant factor in their success.”

The Business Growth Service, launched in December 2014 by the Department for Business, Innovation and Skills, brings together GrowthAccelerator and the Manufacturing Advisory Service, with additional elements from the Intellectual Property Office (Intellectual Property Audits) and the Design Council (Design Mentoring).

The manufacturing offer is closely aligned with GROW:OffshoreWind and Fit for Nuclear (F4N), the latter delivered by the Nuclear AMRC (NAMRC).

The Business Growth Service also refers SME manufacturers to the right support provided by other agencies, including UK Trade & Investment, Innovate UK (including High Value Manufacturing Catapults), the British Business Bank, local Growth Hubs and UK Export Finance.