Credit availability begins to ease but challenges lie ahead for manufacturers
A survey of UK manufacturers, conducted by Findlay Media in association with Deloitte the business advisory firm, has revealed that almost two-thirds of manufacturers (62%) expect the availability of credit to remain the same or improve in the coming 12 months. The industry is also responding positively to the economic challenges by making use of available public sector funding, with 63% declaring a good understanding of available grants and incentives whilst 33% of manufacturers have sought capital from alternative sources such as shareholders or parent companies.
David Raistrick, UK manufacturing industry leader at Deloitte, said: “The overriding message from this report is that while the market is tough, manufacturers have been resilient in their response. The easing of available credit is very welcome, but there are no signs of complacency with manufacturers seeking other appropriate sources of finance where necessary. Manufacturers have also proactively sought to limit their exposure to bad debt, with 65% increasing the frequency of customer credit checks over the past 12 months.”
The survey highlights grant funding as one area where there is still some room for improvement. Whilst the majority of manufacturers have a good understanding of grants and other incentives, a significant minority remain in the dark. Almost one in five said they didn’t know where to look for information on grants, for example with another 19% haven’t yet considered grants as a source of funding.
Raistrick commented: “The fact that almost 40% of manufacturers said they either didn’t know where to find information on available grant funding, or had not considered it as a source of finance, suggests that some manufacturers are losing out on additional funding.”
Indeed, the report found that 55% of manufacturers intend to invest in plant and machinery over the coming 12 months, with 54% of respondents intending to invest in new product development.
Raistrick added: “This shows the appetite for investment from the industry so we would encourage all manufacturers to take advantage of the funding available to them. This will be important as manufacturing emerges from the recession and looks to a future which will require investment in R&D, training and retraining and capital expenditure on new plant and machinery.
The report asked manufacturers about their intentions for the coming 12 months, focusing on investment and exports. 71% of respondents said they expect to increase their exports over the next 12 months, with 41% planning on a double-digit increase. However, a sizeable minority of 29% expected no increase at all. Seventy-five per cent of manufacturers will focus their export strategy on the Eurozone. The US and China were identified as the other key regions, with 45% looking to increase trade with the US and 30% with China.
Raistrick added: “These are confident figures from UK manufacturers, without being overly bullish. As the comparative value of sterling remains low and confidence in global markets picks up, there will be opportunities for manufacturers to increase their exports. However, for every willing seller you need a willing buyer and as growth in many of the major economies remains anaemic the extent to which this can happen is to some degree out of UK manufacturer’s hands.
About the survey:
Findlay Media in association with Deloitte, surveyed 101 manufacturers based in the UK. The survey was carried out between February 2-9 2010.
“Pound for Pound” is the second in a series of quarterly Point of View surveys examining key issues affecting UK manufacturers in seeking access to finance.
The full report is available at www.deloitte.co.uk/pointofview
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms. Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk\about for a detailed description of the legal structure of DTT and its member firms. The information contained in this press release is correct at the time of going to press.