Member Article

SME manufacturers in the North East set for major investment drive

Small to medium sized manufacturers in the North East are set to embark on a major investment drive in order to meet expected new demand it was revealed today.

The Manufacturing Advisory Service (MAS) Barometer’s special focus revealed that 84% of respondents were planning to invest in capital equipment over the next twelve months, with companies looking to spend £134,000 on average.

With almost 2700* firms making up the North East SME manufacturing community, this could equate to hundreds of £millions of fresh industry investment between now and 2015.

60% of firms questioned are looking to purchase new plant and machinery, 36% are focused on upgrading IT/communications infrastructure and one in five are going to improve premises.

The main reasons driving these investment plans were developing new products/processes (36%) and increasing capacity (31%), followed by improving quality and efficiency (20%).

Just a fifth of firms said they planned to approach banks to fund capital equipment purchases in the next year, with manufacturers also choosing to secure money via grants and the Regional Growth Fund (both 29%).

Nearly 50 SME manufacturers in the North East responded to the MAS Barometer, which provides an overview of economic conditions and issues faced by the sector during October to December 2013.

60% of companies reported an increase in sales over the last six months, whilst over three quarters of businesses (78%) expect to boost sales between now and June 2014.

Lorraine Holmes, area director for MAS, commented: “There is a definite feel good factor around North East manufacturing at the moment and these latest figures reinforce positive reports from the Society of Motor Manufacturers and Traders (SMMT) together with encouraging Purchasing Managers’ Index (PMI) data.

“Investment is crucial if we are going to take advantage of reshoring and predicted growth in markets such as offshore wind, renewables and low carbon vehicles.”

She continued: “Importantly, nearly 10% of smaller businesses are looking to spend more than £500,000. This is a significant figure and proves that SMEs are prepared to invest ‘big’ in order to take advantage of opportunities presented by the upturn.

“The fact that more companies are applying for grants and the Regional Growth Fund means awareness of available support is rising and I’m encouraged that some firms are also using their own in-house funds. This suggests manufacturers have been prudent through the recession and are trying to be more self-reliant when it comes to financing expansion.”

Business and Energy Minister, Michael Fallon, said: “These figures point towards signs of a renaissance in manufacturing. SMEs are increasing in confidence, and looking to both recruit and invest.

“We’re committed to working closely with the manufacturing sector to provide a strong base for the recovery, and create growth for the future.”

There were ‘highs’ across the entire range of performance indicators in this Barometer, but perhaps none more striking than the change in attitudes towards recruitment.

For the first time, more than half (55%) of North East manufacturers are expecting to take staff on over the next six months.

Lorraine continued: “The employment data is very encouraging and continues the upturn in the number of firms seeking to boost their workforce.

“With so many firms confident of growth it means that more manufacturers are looking to increase capability and attract employees with different skills.

“The significant question now is do we have enough people to fill these positions or will it be a case of growing capability through apprenticeships and graduate recruitment?”

He concluded: “Our expert MAS Advisors are working with companies on their long-term strategies and skills is one of the biggest issues they are facing. We can help with planning recruitment policies and embedding skills, not to mention referring them to other relevant business support services.”

This was posted in Bdaily's Members' News section by Tom Keighley .