Manufacturers regaining their appetite as optimism on the rise

The latest Manufacturing Advisory Service (MAS) Barometer, which provides an overview of economic conditions and issues faced by the sector from January to March this year, revealed that 63 per cent of companies questioned in the region are expecting to increase sales over the next six months.

This compares to 61 per cent in the same period a year ago, 62 per cent in the last quarter and 55 per cent between April and June 2012.

Martin Coats, area director for MAS in the East, said: “If you compare findings with the similar period in 2012, you will see that firms are a lot more optimistic, with most key performance responses measured showing positive improvements. There appears to be a greater appetite from SMEs for investment in order to remain competitive and I think we are also seeing a desire to create jobs to meet expected demand.”

The research also showed that 30 per cent of the 89 Yorkshire and the Humber-based firms who responded to the survey reported a rise in sales turnover, whilst 91 per cent of respondents are either looking to take on staff or keep workforce levels the same.

Appetite for investment has also seen an upturn, with 41 per cent planning to boost spending on new technologies and 46 per cent intending to invest in new machinery and premises – up two per cent on the last quarter.

When SME manufacturers were asked to identify the ongoing barriers causing them to turn down new opportunities, more than half quoted poor profit margins as the main issue, followed by an inability to meet lead times and access to working capital.

Mr Coats added: “The barriers to new opportunities are also interesting. Poor profit margins and lead times both paint a potential picture of unrealistic customer expectations and it appears manufacturers are favouring a more pragmatic approach to taking work on. Access to working capital was the third most pressing challenge and proves that we still haven’t quite got finance flowing the way it should be.”

Companies said that turnover would increase on average by 19 per cent if they could overcome the three main barriers quoted, whilst 61 per cent admitted new clients accounted for up to 25 per cent of the missed opportunities.

The research suggested that manufacturers appear to have relatively few issues with meeting customer demand with an average score of 93 per cent for ‘on time in full delivery’ (OTIF) performance.

Mr Coats said: “What we are seeing is that Yorkshire and Humber manufacturers have made massive strides forward in implementing best practice production techniques and can compete with the best in terms of quality, cost and delivery. They now need support on longer-term strategies and in developing new products and markets.”

MAS is funded by the Government’s Department for Business, Innovation and Skills.

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