Factories facing difficult outlook

Accountants BDO LLP predict growth will slow this year for Yorkshire manufacturers, following a “relatively good” 2011.

BDO said a combination of “continued reduction in domestic demand... and a lack of access to capital will make 2012 a very challenging year for most manufacturers”.

A recent survey by manufacturers’ group the EEF and BDO showed falling growth in output and orders in the fourth quarter.

A balance of 12 per cent of UK companies reported increased output, and eight per cent reported order growth. That compared with 27 per cent and 23 per cent respectively in the third quarter.

The EEF’s survey also showed concerns about future prospects, with many expecting order books to shrink in home and overseas markets in the next three months. The EEF downgraded its forecasts for manufacturing to 0.9 per cent growth in 2012, from 2.2 per cent.

Jason Whitworth, partner and manufacturing specialist at BDO in Leeds, said: “Whilst funding options are available for businesses with a robust business plan and those that accept the need to share equity upside, access to growth capital will continue to be very difficult, particularly for small and medium-sized enterprises.”

The EEF’s fourth quarter (Q4) survey also showed a steep fall in the balance of Yorkshire firms taking on new workers, falling from 29 per cent in Q3 to just two per cent in Q4. BDO said it expects to see “little positive recruitment throughout 2012” and expects some sectors to shed workers.

The accountancy firm also said it expects input prices to “continue to be volatile”, despite a recent evening out of commodity prices. “Whilst 2012 may show marginally more stability than 2011, demand and pricing for commodities and energy is likely to remain volatile,” it said.