SME Manufacturers Look To Expand

Small Businesses In England Are Set To Expand In The Coming Years, According To The MAS.

26.02.2014

A new survey from the Manufacturing Advisory Service (MAS) has found manufacturers in England are looking to expand in the coming year.

When asked about whether they were planning to invest more money in their capital equipment in the next 12 months, 86 per cent of respondents indicated they are.

The average expenditure on new equipment for manufacturing SMEs across England will be £121,000 in the next year, with the majority focused on new plant and machinery procurement.

However, IT and communication infrastructure remains another common priority, with just over half of those surveyed indicating their willingness to pump money into upgrading existing functionality in this area.

A sizeable minority (31 per cent) also said they will invest in a new or improved premises in the next 12 months, which will be good news for office landlords that have struggled with poor occupancy rates since the beginning of the recession in 2008.

While bank loans would be the traditional route for businesses to access new funding, SMEs that spoke to MAS indicated they would look elsewhere.

Only 19 per cent of those surveyed said they planned to talk to large retail banks for their financial needs, with many preferring to seek investment from grants (27 per cent), or the Regional Growth Fund (21 per cent).

But these plans for growth are, contrary to critics' claims, based on solid profits seen recently.

Some 62 per cent of companies that responded to MAS' survey stated they have seen a boost in sales over the last six months - a six per cent rise on the quarter.

Steven Barr, head of MAS, said: "There is a definite feel good factor around English manufacturing at the moment and these latest figures reinforce positive reports from the Society of Motor Manufacturers and Traders together with encouraging Purchasing Managers' Index data.

"Investment is crucial if we are going to take advantage of reshoring and predicted growth in markets such as offshore wind, renewables and low carbon vehicles."

Expert Opinion
A lot of positivity has been emerging since the end of last year in the economy and this is just the latest in a series of reports to suggest that this is feeding down to small businesses, particularly those which have ambitions to expand over the coming months.

"We would urge companies with plans to expand their workforce, develop new offerings or to consider moving into overseas markets to ensure they are fully prepared for the inevitable growing pains which come with such steps. Central to this is legal advice, which will ensure that small firms meet their regulations and responsibilities on issues including employment law, data protection and various other matters.

"Expansion is a fantastic step forward for small businesses, but they should not ignore the difficulties which can arise when undertaking it."
Fergal Dowling, Partner