BDO LLP, based in Ocean Village Southampton, predicts a year of innovation, exports and unexpected resurgence for 2012.
The ongoing negative news from key world economies and markets, coupled with a lack of access to capital, will make 2012 a difficult year for the majority of the manufacturing sector.
BDO advisers say there may be some ray of hope, however, as government initiatives to promote innovation and export opportunities in emerging markets and growth sectors are rolled out in accordance with the expectations of the UK manufacturing sector in 2012.
Paul Duckworth, head of manufacturing at BDO Southampton, said: “After 30 years of decline, there is now a widespread consensus that a strong and vibrant manufacturing sector is fundamental to the UK economy. The task of rebuilding the manufacturing sector will not be easy, and even though it may take years, a renewed focus on manufacturing is vital for growth.”
He added: “In 2012, we expect that the Government will continue to focus attention on rebuilding manufacturing. In order to emphasise the importance of this sector to economic recovery, however, and also to enable long term sustained growth, the Government must develop a clearer and more explicit medium to long-term framework and strategy for the sector.”
BDO LLP Southampton has many expectations for the UK manufacturing sector in the year ahead. Continued economic turmoil in international markets combined with a lack of capital will impact growth negatively and make 2012 a very challenging year for most manufacturers.
Despite good intentions by the banks and the Government, huge pressures on sovereign debt, bank debt and bank balance sheets will continue to make access to growth capital very difficult, particularly for SMEs.
BDO predicts that positive investment and recruitment spending will be unlikely for many businesses during 2012, due to a substantial fall in the balance of firms taking on new workers throughout 2011 and many being forced to shed labour to balance the books in 2012.
However, firms should continue to invest in innovation and access important government initiatives, after the announcement in 2011 of a number of promising schemes to spur innovation in the UK.
The key to unlocking the full potential of UK innovation in 2012 lies with helping manufacturers to understand and access the raft of initiatives. In the shorter-term, BDO urges companies to increase their awareness of the various support schemes available to them.
BDO is expecting exports to become a vital lifeline within the UK, compensating for a low demand in the home market, despite a rise in the overall output in the automotive trade and a demand for quality products.
BDO predicts that 2012 should finally see some balance or reduction in commodity prices and marginally more stability than 2011. Demand and pricing for commodities and energy, however, is likely to remain volatile.
Focus on sustainability to make manufacturing processes become more resource and energy efficient will also be important for manufacturers in the coming year.