Manufacturing still the key to recovery
While the manufacturing sector continues to face some tough challenges in today’s market, its contribution to the UK economy remains central to the government’s plans for recovery and cannot be underestimated.
Many manufacturing companies have become an integral part of the south east landscape, which now boasts manufacturers in sectors including: aerospace, space engineering, automotive including motorsport, pharmaceuticals and healthcare, advanced engineering and environmental technologies.
With over 45,555 manufacturers that employ in the region of 687,000 staff, the total manufacturing gross value for the south east, which includes East Anglia and London was £44.5 billion in the latest reported figures. While manufacturing jobs and other industries have suffered casualties as a result of the economic climate, manufacturing continues to be a significant contributor to the UK economy and remains a major catalyst for innovation and productivity growth.
The current Eurozone crisis has impacted on the industry but overall optimism remains, with many manufacturers confirming that they expect to see a 15% rise in output in 2012. It is anticipated that decisions about the Eurozone will be made early in 2012, which will stabilise manufacturing prospects for the rest of the year. Currently export opportunities are estimated at 13%, dropping slightly from 18% recorded before the Eurozone effect.
Manufacturing has led to an increased variety of products being developed and as well as the industry’s direct financial contribution, it has helped to support an extensive regional supplier infrastructure.
Although the number of manufacturing companies is in decline nationally, many industry sectors are still remaining robust through international export.
Working capital and export credit continue to be critical issues for manufacturing companies as cashflow comes under pressure through the supply chain. Banks are however tackling financial problems more innovatively and are offering companies more options such as invoice discounting and asset-based finance, which has seen manufacturers able to offload some risk and benefit from immediate funding.
Certain manufacturing industries have been particularly resilient to the market such as food and beverage, which is expected to increase a further 20% in 2012 and currently contributes £73b to the UK economy. The growth of this sector has been attributed to an efficient reduction in operating costs and an increase in the variety of products on offer, which now include healthier and more affordable choices for consumers.
Business groups continue to canvass government support for more positive measures for manufacturers. While there has been some response through positive tax credits and the outlining of critical infrastructure projects to boost manufacturing supply chains, more remains to be done.
Research courtesy of ’The Manufacturer’ and ’Barclays Manufacturing Monthly’ and the ’Grant Thornton Food & beverage Report 2011′
Grant Thornton’s Ones to Watch
There are a number of success stories within the manufacturing sector in the Solent region
A fifth-generation family business founded by Joseph Stannah in 1867, initially making lift components but moving into goods lifts and fully-fledged passenger lifts. The Andover-based firm still manufactures the bulk of its products in the UK. The group employs over 1,700 people and generates revenues over £183 million. The company has seen expansion overseas and has recently signed a joint-venture deal in China. Stannah website
Established over 50 years ago and employing over 460 staff, Eurac has a turnover of over £66m and specialises in the casting, machining and distribution of brake discs. The company has four manufacturing facilities located across the UK and Europe producing over 100,000 tonnes of grey iron castings per year. Despite a sharp increase in the price of raw materials, the group remains positive with a strong order book across all companies. Eurac website
Parvalux, a privately-owned business based in Bournemouth, is the largest UK manufacturer of small geared motors, offering one of the world’s most extensive range of customised AC and DC geared motor units. The company, which has a turnover of £13.5m, exports over 60% of its products to over 21 countries and in the past four years has made considerable management team investment, notably in design and rapid prototyping capability. Parvalux website
For more information on the manufacturing sector in this region and throughout the UK, contact:
Grant Thornton website