Figures released today show manufacturing SMEs in the West Midlands are optimistic for growth in 2013, reinforcing recent economic forecasts predicting an upturn in the sector.
The latest Manufacturing Advisory Service (MAS) Barometer reveals that 45% of companies questioned have seen an increase in their order books over the past six months, with a massive 58% expecting sales turnover to grow between now and June 2013.
The predicted expansion is backed up by the number of firms expecting to take on staff (up 11% to 39%) and those investing in new premises and machinery (up 7% to 44%).
In line with the economic dip seen in the last quarter, fewer companies (41%) have reported an increase in sales turnover from the previous six months.
Tellingly, 44% of manufacturers cited wage salary expectations as a barrier to growth, whilst time appears to be the ‘new gold’ for management teams, with 33% admitting they do not have enough capacity to work ‘on’ their businesses.
Lorraine Holmes, Area Director for MAS in the North and West, explained: “Our Barometer is the only one dedicated to collecting the results, views and opinions of English manufacturing SMEs. It provides an overview of economic conditions and issues faced by the sector from October 2012 to January 2013.
“The overwhelming feeling is one of positivity, with sales expectations, future investment in premises/machinery and the desire to create employment all up on the previous report.”
She continued: “Our companies are sending out a powerful message and highlighting their determination to explore new opportunities in 2013 following a year of global consolidation in 2012.”
Business Secretary Vince Cable said: “Manufacturing is a key driver in our economy, which is why it takes centre stage in the Industrial Strategy for growth.
“As clearly demonstrated in the latest MAS Barometer findings, skills provision remains a concern for many manufacturing SMEs. It’s vital, therefore, that Government and industry continue to work together to address it, and other growth priority issues like access to finance and attracting young people into manufacturing.
“I look forward to discussing these issues and more with businesses at my department’s Manufacturing Summit in Warwickshire today.”
The specialist focus for the latest MAS Barometer was on market knowledge and skills, with respondents asked to reveal their biggest barriers to training and recruitment.
Not surprisingly, 44% said wage/salary expectations was a major hurdle to their growth plans, followed by availability of skills (38%), levels of skills available (37%) and knowing where to advertise to find the right candidate (21%).
Production operatives, CAD designers and R&D engineers are amongst the employees most in demand by SME manufacturers, but it appears that 30% of all recruitment needs focus on non-shopfloor positions, such as sales, marketing and IT.
When asked about fulfilling future staff requirements between now and 2016, manufacturing SMEs tell us that apprentices and graduates will only fill 39% of the new jobs.
Lorraine continued: “SEMTA has done a fantastic job of helping companies develop the future pipeline of talent, with a recent report highlighting a 142% increase in the number of apprentice starts since 2009-10.
“What our findings show is that there is still work to do and we need to ensure that the recent progress is just the start and that we continue to develop apprentices and graduates that have the right level and types of skills required by manufacturers.
“In terms of where the remaining 61% will come from? Well we’ve had a lot of anecdotal information to say companies are turning to older and, in some cases, retired workers as an immediate solution to their skills shortages.”
Nigel Jump, Chief Economist at Strategic Economics, added his view: “Many manufacturers expressed a desire to invest and hire, but deferred expansion in the face of low productivity and uncertain markets in 2012.
“In testing macro conditions, managing cash flow, seeking orders, matching competitors and handling disproportionate regulation are all cited as constraints.
“But, the Barometer also indicates a potential for recovery. SME manufacturers are hoping to increase turnover, staff numbers and investment in the first half of 2013 and hope these aims will be supported by the banks, the government and other agencies.”
RDM Group, which employs 38 people at its headquarters in Coventry, was one of the companies questioned.
The provider of world class automotive, telematics and medical products and engineering services has enjoyed sustained growth in 2012 with annual sales set to top £6m this year.
David Keene, Managing Director, commented: “Our expertise is in delivering complex solutions to customer requirements and coming up with technology that pushes the boundaries of innovation.
“This has given us the impetus to buck the static economic trends and increase turnover considerably during the last twelve months. Furthermore, this growth has necessitated the need for us to launch and market three individual divisions – RDM Automotive, RDM Telematics and RDM Meditec – all with their own Managers.”
He continued: “Investment in R&D and new product development has also hit new highs and we’ve taken on six new members of staff to help us drive the expansion.”
RDM Group is celebrating 20 years in business in 2013 and has a number of plans to mark this milestone.