Monday, September 2, 2013

News: Surveys pick out positives for region's manufacturing sector

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Two influential reports on the state of Yorkshire's manufacturing sector show that firms are experiencing a surge in activity with 70% predicting future increases in sales turnover.

According to the quarterly EEF/BDO Manufacturing Outlook survey, a balance of 31% of companies in Yorkshire reported increased output, up from 18% in the last quarter and the highest for more than a year. Orders balances also increased to the highest level of 2013 to 23% (from 13% in the last quarter and -3% in Q1), significantly higher than the 16% previously forecast.

The latest Manufacturing Advisory Service (MAS) Barometer, revealed that 79% of firms surveyed in Yorkshire have gained new sales as a result of introducing new products or services in the past two years and 62% of SME manufacturers reported an increase in sales in the first half of the year.

MAS, which is funded by the Department for Business, Innovation and Skills (BIS), works for manufacturers and through experienced advisors can help shape strategy, create new products, reduce waste and review supply chains.

Both surveys indicated that many manufacturers see positive signs of continued success in the future with the EEF research showing that Yorkshire firms are forecasting output (40% of firms surveyed) and orders (42%) will increase further in the run up to Christmas. The MAS Barometer recorded 70% of SME manufacturers predicting further growth over the next six months – a record high.

The positive signs mean that nearly half (48%) of companies questioned by MAS expect to spend more on new machinery and premises over the next six months, a 7% rise on the same period last year.

David Caddle, area director at MAS, said: "Manufacturers tend to be very cautious and traditionally would need significant confidence in the long-term future to relax the purse strings.

"Encouragingly, the latest Barometer provides the clearest indication yet that companies are prepared to invest in new machinery and their premises in a bid to remain competitive and take advantage of significant opportunities both at home and abroad."

According to the EEF, the only membership organisation dedicated entirely to the manufacturing industry, the improved outlook is also translating into better job prospects, with a balance of 12% of manufacturers in Yorkshire and Humber increasing headcount in the last three months compared to just 4% in the previous quarter. Looking forward, a balance of 16% expect to continue recruiting in the final quarter of the year whilst the MAS survey highlights that 41% of SMEs are planning to hire new people with a further 48% expecting to keep workforce levels the same.

Jason Whitworth, corporate finance partner at accountancy network, BDO in Yorkshire, said: "With a domestic market at its strongest for almost three years, backed by export sales at a two year high, manufacturers across all sectors and throughout the supply chain are feeling the benefits of an impressive return to confidence."

Andy Tuscher, Yorkshire and Humber region director at EEF, added: "While the signs of recovery that have emerged so far this year are positive, the need for better balanced growth from net trade and investment remains a necessity. As companies become more confident about their growth prospects, we need to see this translate into commitments to invest in new capacity, and for this to take place in the region.

"Government cannot afford to rest on its laurels at the first signs of positive economic news. We need on-going action to ensure the UK is a competitive location for manufacturers to invest and grow."

Manufacturing remains the most important sector to the Rotherham economy. It is responsible for 20.0% of GVA (the value of goods and services produced in an area), compared to 14.3% nationally.

The picture shows saw blades manufactured under the Bahco brand by SNA Europe in Bramley, Rotherham.

The Markit/CIPS UK Manufacturing PMI figures released today also gave a positive overview of the national manufacturing sector, showing that output and new orders rose at the fastest rates since 1994.

MAS website
EEF website

Images: Bahcon

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