2012 Annual Manufacturing Report

In 2012 the macroeconomic issues impacting on British manufacturers have continued. The issues facing the Eurozone remain of high concern and overall UK growth has remained minimal. However, in many areas of the Annual Manufacturing Report 2012, the responses from manufacturers more closely reflect the pre-recession ‘AMR figures from 2007/08, which is very encouraging.

By comparison with the figures from 2011, confidence appears to be returning to the UK manufacturing sector. Manufacturers are still understandably concerned about their future prospects but companies are looking to make investments, a prospect that will be further strengthened by the Government’s December announcement of an increase in capital allowances to £250,000. However, 38% of companies are forecasting a cut in IT spend over the next year.

Companies are displaying a strong focus in 2012 on research and development in order to create new products. Indeed 98% of companies reported plans to spend the same or more on new product development in the coming year with over a third planning to increase spending in this area in 2013.

Financing has also improved this year with an 8% decrease (from 12% to 4%) in the percentage of companies reporting that funding has been impossible to obtain. Structured funding solutions have continued

to be an attractive option for manufacturers and are a positive strategic consideration for companies. Such funding is aligned to the specific profile of a business and is supportive of investments in tangible expenditure.

including assets, stock or sales. By comparison, industry’s perception of how well the government is managing the economy has declined significantly since last year with a 19% decrease in the number of respondents reporting that they believe the Government is managing the economy ‘Very well’. This was also reflected with how helpful and supportivemanufacturers reported finding their local/regional government with 61% reporting that they found local government unhelpful.

There were mixed results in the use and perceived usefulness of business agencies with some enjoying a growth in interaction with manufacturing companies in2012 whilst others saw a contraction. The changeover of the MAS franchise has not impacted its popularity which was up 13% this year, bringing it back into line with 2010 levels. EEF improved its position to report its strongest engagement with manufacturers from the last three years.

Interestingly, in the last 12 months there has been a reduction in sourcing of materials from China, India and Russia which has confirmed a trend that sourcing from the ‘Far East’ is being reduced. Possible explanations for this include poor quality, long lead times and reticence about surrendering IP due to the inherent risks involved.

The overall improvement in confidence and the increase in investment plans are very encouraging and suggest that the recovery is underway. There seemsto be a long way to go but by comparison with the past two years, manufacturers are reporting that they are in a stronger position and are hopeful that this improvement will continue.

For more information please click here,the Manufactuer AMR report has been sponsored by eBECS and Barclays.