2016/17 Q1 Manufacturing Barometer Results - Manufacturing Growth ...

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Manufacturing Barometer Results: National Q3 (October, November and December 2016) Surveyed in January/February 2017 . © SWMAS Ltd 2017. No part of this report may be reproduced without the express permission of SWMAS.

Manufacturing Barometer Q3 2016

Contents

UK Industrial Strategy –

Is the UK doing enough to build its reputation as a stable and predictable business environment?

• • • • • •

Introduction Business Aspirations Survey Demographics Measuring Trends Special Focus About the Manufacturing Barometer

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Introduction Welcome to the latest Manufacturing Barometer collecting the results, views and opinions of manufacturing SME’s. Senior decision makers within small and medium sized manufacturers have shared their views on UK Industrial Strategy and whether the UK is doing enough to build its reputation as a stable and predictable business environment. The Core Trends SME manufacturers across the UK have remained resilient with 57% of firms experiencing an increase in sales turnover in the past six months, up from 48% in the last survey, and 6% up from the same period last year. There has also been a noticeable jump in future turnover expectations, increasing from 59% last quarter to 66% .

Simon Howes Managing Director SWMAS Group

An increased investment in both new technology and new machinery over the past 6 months has decreased slightly from last quarter’s survey, dipping from 44% to 42%. However, firms are forecasting increased investment within the next 6 months, with 50% expecting to increase their spend, compared to 45% last quarter. Finally, there has been a 3% decline in the number of firms expecting to increase employment in the next six months, decreasing from 49% last quarter to 46%. However, this percentage shows there is still a significant number of businesses looking to recruit, which is good news for the sector and for the UK economy as a whole. The Special Focus In this quarter’s survey we sought to understand SME manufacturers thoughts on UK Industrial Strategy.

Continued Overleaf...

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Introduction Perhaps the key finding is that a surprising 42% of respondents, don't know whether UK Industrial Strategy is built to deliver their business needs, clearly showing their is a lack of visibility and understanding amongst SME manufacturers throughout the UK. When asked what should be the main focus for UK Industrial Strategy, R&D and Productivity were clearly high on the priority list for businesses, closely followed by Access to Growth Opportunities within the UK, Export and Operational Skills. Conclusions The overall picture seems clear - although remaining resilient, SME manufacturers are feeling disconnected from Industrial Strategy and considering SMEs make up over 90% of businesses in the UK, it is an issue that needs addressing. The budget – with additional money for disruptive technology and new T-Levels to boost technical skills – showed there is an appetite to support manufacturing and we’d urge Government to listen to SMEs as we move forward.

Simon Howes Managing Director SWMAS Group

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“Small but steady UK growth and significant export growth in selected markets.” Ratman “Grow into purchased Unit within 5 years and develop knowledge base staff skills.” “To consolidate and grow our current export business in Japan and to start significantly exporting to the USA, South Korea, China, Australia and Canada ” Tom Smarte, London “Growth in current markets. Investing in new technology for growth and develop own product to reduce risk from higher in supply chain. ” Groveley Precision Engineering

“Min 10% growth in turnover and profitability per year and to at least double in the next 6-7 years. Also to have our own purpose built factory.”

“Increase output capacity so that we don't have to turn away orders ” Proline Engineering Ltd

Business Aspirations

Manufacturing Barometer Q3 2016

Survey Demographics 3%

4%

20%

Chair of the Board Finance Director

7%

Managing Director Operation Director Other

66%

Over 66% of respondents were managing directors. Individuals who are in the business, hands-on, running it day-to-day. 326 Respondents

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Manufacturing Barometer Q3 2016

Past Sales How has your sales turnover changed within the past 6 months?

Much Reduced/Reduced Much Increased/Increased

90% 80% 70% 60%

57% 51%

50%

51%

49%

48%

43%

48%

40% 30% 20% 10% 0%

-10% -20% -30%

-27%

-28%

Q1_2015

Q2_2015

-40%

-32%

-28%

-30%

Q4_2015

Q1_2016

-24%

-22%

Q2_2016

Q3_2016

-50% Q3_2015

318 Respondents

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Manufacturing Barometer Q3 2016

Future Sales How do you expect your sales turnover to change over the next 6 months?

Much Reduced/Reduced

Much Increased/Increased

90% 80% 70%

72% 66%

64%

69%

60%

66% 59%

59%

-18%

-19%

Q1_2016

Q2_2016

50% 40% 30% 20% 10% 0% -10% -20%

-11%

-9%

-11%

-10%

-13%

-30% -40% -50% Q1_2015

Q2_2015

Q3_2015

317 Respondents

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Q4_2015

Q3_2016

Manufacturing Barometer Q3 2016

Past Employment How have staff numbers in your company changed in the past 6 months?

Much Reduced/Reduced Much Increased/Increased

90% 80% 70% 60% 50%

41%

40%

40%

38%

41% 35%

37%

31%

30% 20% 10% 0% -10% -20%

-18%

-30%

-19%

-23%

-25%

-22%

-23%

Q1_2016

Q2_2016

-19%

-40% -50% Q1_2015

Q2_2015

Q3_2015

316 Respondents

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Q4_2015

Q3_2016

Manufacturing Barometer Q3 2016

Future Employment How do you expect staff numbers in your company to change in the next 6 months?

Much Reduced/Reduced Much Increased/Increased

90% 80% 70% 60% 50%

52%

51%

46%

45%

44%

49%

46%

40% 30% 20% 10% 0% -10%

-6%

-6%

Q1_2015

Q2_2015

-20%

-10%

-9%

-9%

-10%

Q3_2015

Q4_2015

Q1_2016

Q2_2016

-7%

-30% -40% -50%

318 Respondents

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Q3_2016

Manufacturing Barometer Q3 2016

National Past Capital Investment How has your investment in new machinery/premises changed in the past 6 months?

Much Reduced/Reduced Much Increased/Increased

90% 70% 51% 50%

45%

41%

44%

44%

42%

-11%

-10%

-9%

Q1_2016

Q2_2016

Q3_2016

37%

30% 10% -10%

-6%

-6%

-8%

Q1_2015

Q2_2015

Q3_2015

-3%

-30% -50%

318 Respondents

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Q4_2015

Manufacturing Barometer Q3 2016

National Future Capital Investment How do you expect your investment in new machinery/premises to change in the next 6 months?

Much Reduced/Reduced

Much Increased/Increased

90% 80% 70%

60% 50%

56% 50%

50%

47% 41%

45%

50%

40% 30% 20% 10% 0% -10%

-5%

-6%

-7%

-3%

-20%

-14%

-12%

Q1_2016

Q2_2016

-9%

-30% -40% -50% Q1_2015

Q2_2015

Q3_2015

317 Respondents

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Q4_2015

Q3_2016

Manufacturing Barometer Q3 2016

National Past New Technology How has your investment in new technology changed in the past 6 months?

Much Reduced/Reduced Much Increased/Increased

90% 80% 70% 60% 50%

46%

40%

40%

44%

40%

36%

37%

-8%

-10%

-7%

Q1_2016

Q2_2016

Q3_2016

33%

30%

20% 10% 0% -10%

-3%

-3%

-3%

-3%

-20% -30% -40% -50% Q1_2015

Q2_2015

Q3_2015

318 Respondents

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Q4_2015

Manufacturing Barometer Q3 2016

National Future New Technology How do you expect your investment in new technology to change in the next 6 months?

90%

Much Reduced/Reduced Much Increased/Increased

80% 70% 60% 50%

46%

51%

49%

47% 41%

44%

44%

40% 30% 20% 10% 0% -10%

-3%

-4%

-4%

-3% -9%

-10%

Q1_2016

Q2_2016

-20%

-7%

-30% -40% -50% Q1_2015

Q2_2015

Q3_2015

317 Respondents

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Q4_2015

Q3_2016

Manufacturing Barometer Q3 2016

Special Focus – What key thing do you feel Government need to address to help better support the growth of UK manufacturing? Access to markets and less complicated finance structures...

Understand that the power house of manufacturing in the UK is not the blue chip companies but the SME's - and then support them...

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Manufacturing Barometer Q3 2016

Special Focus – What do you believe should be the main focus for UK Industrial Strategy? Access to finance Making it easier for foreign firms to invest in the UK Access to growth opportunities within the UK Process Innovation & Automation Not at all important

Skills - Operational

Slightly important Important

Skills - Management

Fairly important Skills - Board Level

Very important

Productivity Export R&D 0%

10%

Respondent numbers vary

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20%

30%

40%

50%

60%

70%

80%

90%

100%

Manufacturing Barometer Q3 2016

Special Focus – Do you believe current industrial strategy is built to deliver you business needs? Don't know

Disagree

Completely disagree

Completely agree

Agree

0

20

270 Respondents

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40

60

80

100

120

Manufacturing Barometer Q3 2016

About the Manufacturing Barometer The Manufacturing Barometer is a quarterly survey that charts the experiences of UK SME manufacturers. It is the largest survey of its kind and has informed both government industrial strategy and the national debate on manufacturing. Run by SWMAS since 2009 in the South West of England, the Manufacturing Barometer records trends in employment, turnover and investment. Each quarter, a ‘special focus’ explores an issue in greater depth. In the past this has included issues such as productivity, overseas production and energy efficiency. Companies are able to use this quarterly Manufacturing Barometer to compare themselves against other firms within their sector or region. For more information please contact:

[email protected] 0845 608 3838

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