As headline sponsor for this year’s EEF Future Manufacturing Awards and a major SME supporter, Aldermore welcomes news that British manufacturers hold a positive outlook for 2015.
According to the EEF’s latest Executive Survey, released this January, 37 per cent of firms within the manufacturing sector expect growth to continue this year, compared to just 17 per cent who foresee a decline. This optimism follows a successful 2014 for the sector, which realised its highest rate of growth since 2010, estimated at 3.5 per cent. While expectations have moderated somewhat on last year’s predictions following this exceptional result, 70 per cent still see the UK as a favourable location for manufacturing activity and over a third believe they will see the sector as a whole expand in 2015.
Reflecting on the results, Aldermore’s Deputy CEO and Group Commercial Director, Mark Stephens, commented:
“It is important to note that the UK is still seen as a competitive place for manufacturers to do business, and ultimately, manufacturers are confident that they can achieve sales growth in the year ahead. At Aldermore we’re getting ever increasing demand from all sorts of innovative UK manufacturing firms needing to free up cash-flow to expand their business and take on new contracts. The positive outlook for manufacturing is testament that more and more firms are now able to access the finance they need to invest, grow and make a profit.”
In particular, the EEF report highlights that manufacturers expect both productivity and jobs to increase, with 40 per cent on balance likely to recruit new employees in 2015. Across the sector, rubber and chemicals producers were most likely to report a positive outlook, while machinery industry businesses took a more pessimistic approach, stating that decline is likely.
A minority of sub-sectors aside, on balance the UK manufacturing community plans to boost spending on research and development, intellectual property rights, software, staff training and recruitment in 2015 in order to enhance competitiveness. Marketing and branding also emerge as key areas where businesses will be seeking to differentiate their own offering from the crowd.
In spite of these opportunities, several key challenges remain for the sector; one half see rising input costs as a source of risk in 2014, echoing previous years, a third believe heightened wage demands will place pressure on their profit margins and 28 per cent face cash-flow burdens.
Exchange rate volatility was similarly cited by 38 per cent and economic disruption in major markets by one in four. Given these risks, businesses expect a slight deterioration in the global economy and were much more confident about domestic activity than overseas demand. A balance of seven per cent think the economic situation in the Eurozone will decline in 2015, which has significant implications given that 9 in 10 EEF members operate within this market. The outlook for demand in the Middle East and South America has also declined, though export prospects remain bright in North America and Asia.
Though the possible risks are significant, as a whole the EEF report shows manufacturers’ prospects have been bolstered by a strong 2014 and the industry is poised for further growth in 2015.
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