Jan 2020 - 03: An expert overview of the industry

An expert overview of the industry.

For the last decade and more, Close Brothers Asset Finance has been surveying business owners in the manufacturing and engineering industries on a quarterly basis about a broad spectrum of issues.

Ian Barker, Managing Director, Manufacturing, Close Brothers Asset Finance.

He says the contents of the survey range from financial confidence to mental health and has provided a unique level of insight and we're now sharing some of the points, and where relevant, comparisons are made with national sentiment.

ECONOMIC OUTLOOK
Manufacturing and engineering SME business owners’ views on the economic outlook continue to trend higher than the rest of the UK.

43% are confident the economy will grow across the UK, the figure is 36%, with a further 24% feeling that while it will take longer, better times are ahead, nationally the figure is 27%.
A significant minority of 28% are concerned that the economy could decline and haven’t
experienced any true economic growth.

Looking ahead, over half, some 53% of firms expect their performance to remain static, while 39% are hoping to expand their operations in the coming year, which is more optimistic than the UK average of 36%.

Only 8% predict their business will contract.
CONCERNS & PRIORITIES
Maintaining cash flow is the biggest concern for 33% of businesses, followed by ‘late payments’ on 13% and ‘finding extra working capital’, also on 13%, which broadly reflects the national sentiment.
At 39%, ‘achieving growth’ is by some distance the main priority, followed by ‘paying down debts’ on 23% and ‘business consolidation’ on 18%.
MENTAL HEALTH
While the impact of mental health continues to be felt across the SME community, with 51% of manufacturing and engineering firms in the UK reporting that at least one of their employees has taken time off work because of it, attitudes are changing for the better.
Only 6% of SMEs in the industry think that attitudes towards those suffering from mental health are becoming worse, against 53% who say it’s changing for the better.
AGEING WORKFORCE
Despite SMEs overwhelmingly understanding the benefits of employing older workers, including their breadth of experience and mentoring capability, over two-thirds feel that the recruitment process discriminates against older workers.
While exactly half of manufacturing and engineering firms are comfortable with being able to recruit the talent they need in the coming five years, 39% are predicting problems in the future and a further 11% say they’re already struggling.
BENEFITS OF DIVERSITY
The UK’s manufacturing and engineering SMEs strongly believe that having a diverse workforce is both beneficial to their bottom line and makes it easier to attract candidates.

Over three quarters in total 77% of respondents agreed that diversity is ‘good’ for their financial performance, contrasting to only 15% who didn't agree.
The benefits of having a diverse workforce are also well understood, with 72% of the opinion it makes their business more attractive to candidates, nationally the figure is 64%.

However, while this may be recognised by employers, many are having difficulties increasing diversity with 42% as against 33% nationally finding it difficult to fill existing vacancies while a further 27% don’t get enough interest from ‘minority’ candidates.