Posted On: 12th September 2012
There’s a general consensus doing the rounds in industry that if we’re not careful we could quite quickly talk ourselves into another recession.
This isn’t my opinion, but the actual thoughts of thousands of manufacturing SMEs who talk to our advisors on a daily basis…in other words, the people at the coalface of our sector.
Recent forecasts have told a sorry story of PMI figures dipping, export sales dropping off and, worse still, the spectre of a painful ‘double dip’ recession firmly hovering on the horizon. The reality is somewhat different.
Results from the Manufacturing Advisory Service (MAS) National Barometer show that 53% of firms have increased turnover in the last six months, with the same number expecting an upturn in sales between now and the end of the year.
Equally impressive, is that more than a third of manufacturing SMEs are looking to recruit and 71% of the 719 respondents questioned believe they will boost export turnover by late 2013. So much for a downturn you might think?
The answer probably lies somewhere in the middle, with increased enquiry levels and investment in premises and machinery both down from the previous barometer.
Our role at MAS is to help SME manufacturers grow by giving them access to tailored advice, practical hands-on support and signposting them to the relevant funding opportunities.
We primarily do this by mobilising a team of 85 experienced advisors to work on-the-ground with companies all over England, developing strategy, new product introductions, export drives and world class manufacturing processes.
This gives us an excellent insight into current and future trends and the anecdotal information we are seeing firsthand currently backs up ‘the growth’ revealed in the Barometer.
Manufacturers are saying they are benefitting from the unprecedented £4.5bn of investment flowing into the UK automotive industry, others have been able to attract new customers through advanced engineering, innovation and a world-leading low carbon expertise.
The common thread among these stories is that SMEs have been proactive in winning this work. And this hasn’t been a scattergun approach, quite the reverse.
In today’s competitive environment you need a more structured plan to target new markets both at home and abroad and you need to be prepared to invest to make it happen.
This could be in new marketing material, attending trade shows, developing social media strategies or even funding the necessary R&D required to take core competencies and apply them to complementary industries.
BSC (Diecasting) is a perfect example of this in practice. The zinc and aluminium pressure diecaster has more than doubled its turnover since 2009, creating 20 new jobs in the process.
When the management team embarked on this growth push they made a concerted effort to invest in new machinery, the skills of their staff and importantly re-branding and a PR campaign. They ‘talk the talk as well as walk the walk’.
They also made no excuses for being a UK manufacturer, in fact they made a virtue of it and new orders soon followed – from the brewing, hydraulics and automotive sectors.
The specialist focus for this quarter’s Barometer was export and the results were even more impressive than many experts would have predicted.
71% of respondents believe they will increase overseas sales in the next eighteen months, with one in ten expecting turnover to increase by 50%.
The appetite is there, but it’s not without its issues. 41% see generating sales as their biggest challenge, followed by selecting the right agent/distributor (17%) and fluctuating exchange rates (13%).
The latter is a game of chess that any company will find difficult to control, but there is support out there for winning work and negotiating your way through the maze that is finding someone to represent you in international markets.
UK Trade & Investment (UKTI) is a fantastic resource that firms can take advantage of regardless of their level of export experience and the UK is well equipped with a network of embassies that offer great contacts and on-the-ground ‘know-how’.
At MAS, we are in the prefect position to help with the actual manufacturing challenges of exporting also revealed in the survey. The main threats causing management teams sleepless nights were competitive production costs (50%) and meeting international standards (14%).
These are both business areas we’ve been helping SMEs with for almost ten years by undertaking a business review and then developing an agreed action plan to help them address key needs. This is a service still very much central to the MAS offer.
Exporting is always a delicate subject for any company. It can be a big risk and if done without the right approach can sometimes be fatal.
However, prepare well, identify your strengths and tap into the support on offer and it could well be the best business decision you ever make.