From investment to turnover, recruitment to profits, forecasts are down for UK SME manufacturing bosses as they divert valuable resources to manage Brexit uncertainty, according the national Manufacturing Barometer.
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ALMOST A THIRD OF SME MANUFACTURERS “MOVING SUPPLIER BASE FROM EU TO UK
The latest quarterly insight into the SME manufacturing sector from SWMAS and partner Economic Growth Solutions, the UK SME Manufacturing Barometer, shows how the challenging economic and industrial climate is pushing UK manufacturers to carry significant risks as they move their supplier base out of the EU and invest precious cash reserves in stockpiling raw materials.
Simon Howes, CEO of Exelin Group (encompassing SWMAS), said: “Previous Manufacturing Barometers have demonstrated the characteristic determination and pragmatic approach shown by UK SME manufacturers in uncertain times, yet we must acknowledge that performance is down compared to this time last year and this is being driven by a lack of clarity on the future.”
Whilst actual and forecast performance both show a slight recovery from the previous quarter, the number of SME manufacturers reporting an increase in turnover, profits, staffing and investment in new machinery and premises are all down compared to the same period in 2017.
Projections for the next six months are also at a much lower level than and although some manufacturers indicate a desire to invest in their businesses, many continue to hold off, awaiting clarity.
Just over half (51%) of those surveyed said turnover had risen in the last six months, but was still 10% down on the previous year.
Profits are also affected, though not as dramatically, with 42% reporting an increase compared to 45% the year before.
Investment in new machinery and premises is crucial for any manufacturing business in order to stay competitive, but this saw another steep decline with just 37% increasing spending.
In this run up to Brexit, the Manufacturing Barometer also asked respondents what they are doing to secure and develop their supplier base.
Specifically, they were asked whether, within the next 12 months, they intended to relocate any of their supplier base for raw materials and components, sub-assemblies and bought-in part-finished or finished goods.
Over a quarter (27%) said they were considering relocating supply currently sourced in the EU to elsewhere – importantly, nearly 20% of this figure said they could instead seek these suppliers in the UK.
There is more opportunity for the UK too with 8% of UK SME manufacturers saying they could relocate suppliers currently based outside the EU to the UK.
The Manufacturing Barometer also explored manufacturers’ specific plans to stockpile – an intention that first came to light in the previous Manufacturing Barometer. Amidst the continued Brexit uncertainty, more than two thirds (69%) said they were using cash reserves to buy up and store raw materials and components.
