Senior decision makers share their views and experiences of buying and selling into the UK market
Senior decision makers within SME manufacturers have shared their experiences of buying from and selling into the UK market. These experiences are vital to understand the impact of the decision to leave the UK on UK PLC – both now and in the future.
SME manufacturers across England have proved resilient to any Brexit headwinds. 48% of firms experienced an increase in sales turnover in the past six months, up from 43% in the last survey, and just 1% below the same period last year. Future turnover expectations remain below pre-referendum levels, but have been fixed at 59% for the past two surveys.
Investment intentions in both new technology and new machinery have largely recovered from the small post-referendum drop, perhaps reflecting a growing acknowledgement that until the UK finally leaves the UK little has actually changed.
Finally, 49% of firms expect to increase employment in the next six months. At a time of near-record employment this is more good news for the sector and for the UK economy as a whole.
In this quarter’s survey SWMAS sought to understand SME manufacturers’ experiences of buying from, and selling to, the UK.
Perhaps the key finding is that 97% of businesses plan on maintaining or increasing the level of goods sourced from the UK within the next 2 years. Similarly, 79% of firms expect to increase their UK sales over the same period. For many this is a sensible position as the future trading relationships between the UK and the rest of the world are still unknown. It may make sobering reading, however, for those seeking to champion the UK’s exports during this period who are arguing that the firms should continue to seize opportunities around the world.
58% of firms said that they believed the provenance of UK manufactured goods helped them to win business. This figure could be seen as good news by some, but it also illustrates the increased importance of strengthening “Brand Britain” in the minds of customers at home and abroad.
However, even for firms focusing on the UK market, challenges remain. 33% of firms said they have difficulty in providing goods at a competitive price to UK customers, and a further 29% said that they had difficulty approaching UK clients to close sales. These are problems that SWMAS encounter every day, and are working to support firms to exploit UK based opportunities (such as Hinkley Point C) and to find UK based suppliers. Furthermore, they are working with firms to increase productivity, ensuring that they can remain competitive against cheaper suppliers from abroad.
Overall, this is an interesting time for manufacturing in the UK, filled with both risks and opportunities. In particular, 63% of firms told us that the weaker pound would benefit exports, and 83% said that it would increase the cost of bought in goods. To benefit fully from the change in circumstances many firms will be seeking to increase the materials they source from the UK, re-establishing supply chains that have been off-shored in the past few decades. Equally, they will want to develop export strategies that are sustainable well beyond the next two years, but that maximise the short term opportunity presented by the weaker pound.
At SWMAS their specialists are working with firms to exploit this opportunity and to support SME manufacturers to continue to grow, take on new staff, and contribute to the UK economy.
You can download your copy of the Q2 2016-2017 Barometer report below