Welcome to the Close Brothers Asset Finance update of the Manufacturing and Engineering industry where we highlight a wide range of issues relevant to SMEs in this industry.
The results are based on the Close Brothers Business Barometer, a quarterly survey of close to 1,000 SMEs across the UK conducted by specialist independent researcher, Lightspeed, on Close Brothers’ behalf. Where relevant, comparisons are made with national sentiment.
The commentary in this review focuses on:
- Economic outlook
- Finance requirements
- Concerns & priorities
- Mental health
- Environmental responsibility
- Traffic congestion
- Recycling rates
- Broadband speeds
Manufacturing and Engineering SME business owners’ views about the economic outlook are broadly in line with the rest of the UK, with 41% confident the economy will grow (UK: 37%) and a further 31% feeling that while it will take longer, better times are ahead (UK: 29%).
A significant minority (24%) are concerned that the economy could decline and haven’t experienced any true economic growth.
Looking ahead, just over half (52%) of Manufacturing and Engineering firms expect their performance to remain static, while 43% are hoping to expand their operations in 2019, which is more optimistic than the UK average of 38%. Only 5% predict their business will contract.
Despite businesses in the industry showing a strong willingness to invest, over a quarter (27%) of those polled are finding it a ‘major challenge’ to access the funding they need and more difficult than it was a year ago. A further 47% are saying that it hasn’t become any easier to get hold of finance and is as problematic as it’s ever been.
A combined 27% say it’s either become easier or they’ve ‘never had a problem accessing finance’.
Regardless of the challenges, 70% of business owners said that they would be seeking funding for business investment in the coming 12 months.
Concerns & priorities
Maintaining cash flow is the biggest concern for 28% of businesses in the Manufacturing and Engineering industry, followed by ‘late payments’ (15%) and ‘competitors’ (13%), which broadly reflects the national sentiment.
At 40%, ‘achieving growth’ is by some distance the Manufacturing and Engineering industry’s main priority, followed by ‘paying down debts (26%) and ‘developing products / services’ (17%).
A large majority of Manufacturing and Engineering businesses (86%) feel that traffic congestion is a significant problem in the UK and it’s only becoming worse, according to 58% of those surveyed.
This is impacting 48% of Manufacturing and Engineering companies’ ability to trade or operate at their full capacity, ahead of the UK average of 41%; for a further 46%, traffic congestion has negatively impacted profitability (UK: 41%).
Over half (55%) feel the current road network is not sufficient to cope with existing traffic levels.
Mental health in the workplace
Nearly three out of five (58%) of Manufacturing and Engineering business owners believe people with mental ill health continue to be stigmatised in the workplace, which is 4% more than the national average. To help protect anyone affected in their teams, 68% of firms have the requisite policies in place to support those who work for them.
Half of those polled believe there is sufficient government assistance – including advice services – for SMEs to help support employees with mental ill health.
Manufacturing and Engineering firm owners – 85% - are overwhelmingly in favour of a mental health helpline, along the lines of the NHS 111 service, to help those in need to be referred to the most suitable service, depending on their requirements. This is because many firms, notably those at the smaller end of the scale, don’t have the resources to offer their employees the relevant support they may need.
Over eight out of 10 (83%) businesses in the Manufacturing and Engineering industry are actively encouraging their employees to be more environmentally responsible, with 64% going as far as saying they would consider offering employees one day off a year to volunteer for environmental causes.
Three quarters of Manufacturing and Engineering firms prioritise the financial cost of goods over their environmental impact when making procurement decisions; however, 87% make a conscious effort to separate recyclable materials from the waste they produce.
Businesses in the Manufacturing and Engineering industry are relatively likely to use social media as a sales tool. Of the 59% who do, Facebook is the most popular followed by LinkedIn and Twitter. Instagram and YouTube are also relatively popular.
Over half (54%) of Manufacturing and Engineering firms employ someone to drive their online presence, which has had significant success, with 55% having made sales off the back of social media.
Speed of broadband has become so critical that for 68% of firms it would be an influencing factor if they decided to relocate, which is among the highest of all industries polled.
In the main (82%), businesses are content with their broadband speeds, although that still leaves around one in five unsatisfied, with 35% admitting to having lost business because of slow speeds.
Manufacturing and Engineering operators are, for the most part, pleased both with their provider’s responsiveness (81%) and value for money (84%).