West Midlands Manufacturing SMEs predicting future growth

Manufacturing SMEs in the West Midlands are predicting an increase in sales over the next six months according to the Manufacturing Advisory Service (MAS) Barometer.

Lorraine Holmes, Area Director for the Manufacturing Advisory Service (MAS)

Lorraine Holmes, Area Director for the Manufacturing Advisory Service (MAS)

46% of the companies questioned expect to grow between now and March 2013, with a staggering 54% of firms set to boost investment in plant and machinery. There was also a moderate increase in those planning to spend on new technology (37%).

This renewed optimism comes after a slight softening in the marketplace that has seen the number of businesses reporting increased sales match figures seen in the previous survey (43%).

As part of the Special Focus, the Barometer also aimed to find out what sectors West Midlands SMEs are selling into, with the findings showing automotive as the most popular (63%), closely followed by materials/general engineering (51%) and defence (41%).

When asked about future sales growth to 2016, defence, off shore wind and rail appear to be the most attractive propositions for SMEs looking to increase minor sales to a moderate level.

Lorraine Holmes, Area Director for the Manufacturing Advisory Service (MAS), commented: “It’s reassuring to see more of our SMEs are expecting to increase their sales going forward and this despite a slight fall over the last six months.

“Manufacturers have been reporting fluctuating demand and softening in certain sectors so to see the renewed optimism suggests many believe these markets are coming back on stream.”

She continued: “81% of West Midlands companies told us that they intend to maintain or increase their workforce, which shows a general stability in these figures.”

Business Minister Michael Fallon said: “It’s encouraging to hear of the optimism amongst manufacturing SMEs in this Barometer. Of course, these are still challenging times, but the recent GDP output is the latest sign yet that the wider economy is starting to recover.

“We will continue to support manufacturers through MAS to ensure they are best placed to take advantage of opportunities to grow.”

This is the third National Barometer conducted by MAS and provides a snapshot of trends in English manufacturing SMEs from July to September 2012 as well as an overview of economic conditions and issues faced by the sector.

A key focus this time was the ‘barriers to growth for companies entering specific industries’.

Companies said that market knowledge was the biggest challenge to entering seven of the twelve sectors listed (electronics, food, marine, nuclear, off-shore wind, pharmaceutical and rail), with material costs the major concern for firms looking to get involved in materials/general engineering.

Accreditation, unsurprisingly, is the pressing issue for aerospace and nuclear, while production expenditure was the barrier to entry in securing sales in automotive.

“25% of the companies we questioned classed themselves as advanced manufacturers and there is a definite trend suggesting that SMEs are generally adding more value by converting material,” explained Lorraine.

“I don’t think anyone will be surprised that market knowledge was the biggest barrier for firms across seven sectors as this can be difficult information to access and interpret.

“MAS can help with this as we have a number of sector specialists who will be able to provide valuable insights and the right contacts to help SMEs get started in new markets.”

Penso Consulting Ltd – a company featured in the Barometer – is one of the West Midlands fastest growing manufacturers having seen sales rise from £8m to £11m in the last year.

The Coventry-based company, which specialises in engineering services, finite element analysis, interior trim, electronic systems integration and niche vehicle manufacture, has landed a number of high profile projects within the automotive sector.

“Our success lies in offering engineering solutions that we believe none of our rivals can match and our expertise is leading to new orders almost on a weekly basis,” explained Michael Collins, Sales and Marketing Director at Penso.

“We’ve already completed interior trim products for Morgan, advanced body engineering in lightweight materials for Jaguar Land Rover and we manufacture a vehicle for Mercedes Benz on the Vito platform.”

He continued: “In the last six months, we’ve taken on an additional 25 staff, ranging from apprentices and graduates to chief engineers and project managers.

“We have invested heavily in our premises already this year with the installation of a new trim studio and composite clean room. The next step is to embark on even more improvements in new plant, machinery and infrastructure”.

MAS, which is funded by the Department for Business, Innovation and Skills (BIS), works for manufacturers and through experienced advisors can help shape strategy, create new products, reduce waste and review supply chains.

Companies can take advantage of a free review that identifies key priority areas and funding is available for improvement projects focused on increasing efficiency, developing new products, strengthening supply chains and boosting sales.

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