Research has found that UK manufacturers are much more optimistic about their international prospects post-Brexit, on average predicting double digit growth in export sales by 2020.
The Manufacturing Barometer focusing on Exporting (Summer 2018), delivered nationally, revealed that manufacturers’ fear over ongoing Brexit uncertainty has had a minimal effect on day-to-day exporting opportunities within their business.
Highlighting that their attention must be on consolidation – especially as they also anticipate an overall slowdown in sales coupled with a struggle to recruit more staff in the short-term.
However, concerns over the future of the UK is concerning some of the UK’s SME manufacturers’ exporting desires as the sector focuses on stabilising its current position.
Almost 300 of the manufacturing sector’s senior decision makers were asked about their aspirations, plans and fears, as well as their overall business performance in the last six months.
70% of manufacturers who already send their goods overseas reported an anticipated average increase in turnover of just 2.1% generated by exports over the coming year (2018/19).
However, the same group predicted that their exports will increase by 12 per cent between now and the summer of 2020.
Respondents who don’t currently trade overseas but have plans to start (10%) were even more bullish about their prospects, predicting a 17% export boost to their turnover for 2018/19 and 32% between now and 2019/20.
These are the headline findings of the latest National Manufacturing Barometer, the UK’s largest and widest-ranging survey of the SME manufacturing sector, conducted by SWMAS (part of the Exelin Group) in partnership with Economic Growth Solutions Ltd.
“The picture emerging from this research is of a sector focused on consolidating what they already have, for at least the next 12 months when we will finally know what a post-Brexit UK will look like,” said Simon Howes, CEO of the Exelin Group.
He continued: “Whilst manufacturers’ cautiousness about export growth amidst the current chaos is no shock, it is encouraging to see their ambitions for 2020.
“Not only does this reflect the sector’s vision, it also shows that for a large and influential part of our economy there are many optimistic signs of life after Brexit.”
The Barometer also asked SME manufacturers to reflect on the last six months of trading. According to respondents, whilst reporting profits largely in line with the same period a year earlier, it appears that this is at the expense of staff recruitment numbers and investment in new equipment.
Whilst 54% reported an increase in sales, investments in new machinery and premises dropped to 41%, compared to the previous quarter’s 48%.
Turning to recruitment, 41% of manufacturers increased headcount, but this was partly offset by the 20% who reported a reduction in staff numbers, sending overall recruitment numbers back to levels not seen since 2016/17.
This trend looks set to continue, with the number of manufacturers looking to recruit between now and the end of the year dropping to 46%, down from last quarter’s 53%.
This is echoed in the latest Manufacturing Barometer (Autumn 2018) focusing on Brexit readiness, click here.
There are positive signs too, with exactly half of manufacturers expressing their desire to invest in new machinery and premises over the coming months in order to boost productivity and profitability.
“Brexit is clearly foremost in manufacturers’ minds,” said Dean Barnes, Regional Director of Economic Growth Solutions, delivering the Manufacturing Growth Programme.
“Many SME manufacturing firms are adopting a strategy of consolidating and maximising their current opportunities, whilst making the most of this uncertain time to invest in capital equipment, staff development and new products, ready to take on the challenge – and opportunities – once the UK finally leaves the EU.”
Simon Howes continued: “The Manufacturing Barometer highlights a medium-term view of growth centred around a difficult ride for the next year as we navigate the choppy waters of Brexit.
“Manufacturers are looking towards a period of stabilising and consolidation and, beyond that, will be looking to kick-start their growth, particularly in exports, once we finally leave the EU.”
In addition to the Manufacturing Barometer, Economic Growth Solutions constructed an additional survey to senior decision makers of SME Manufacturers to find out in more depth what their exporting intentions and aspirations are, the changes in exporting strategies and how exporting support can be improved.
The results echoed the Manufacturing Barometer results with 71% currently exporting while they plan to continue their exporting aspirations. However, there was 14% who have never previously exported but on a positive, they have a plan to export in the future – even with Brexit on the horizon.
Staff was a key theme in regard to what changes had been made within businesses to support exporting. Recruiting more staff or developing internal teams to ensure they have the technical knowledge to support international growth of the business.
Of the 71% who have exported, 100% have previously received support to help with exporting aspirations. This had been through a multitude of support programmes and organisations, yet all of those who have received previous support are open to receive additional support to help export which raises the question… Are SME manufacturers receiving the right support at the right time with their exporting needs and aspirations?
If you are currently exporting and want to become more efficient, or you’re thinking about exporting but are unsure if your business can support additional markets, get in touch with the Manufacturing Growth Programme.
Contact us today on 01664 501301 or get in touch with your local Manufacturing Growth Manager directly.
Copyright © Economic Growth Solutions, 29th October 2018.