The engineering sector could eventually disappear from the stock market as the few remaining listed companies are bought by global players, an industry analyst has warned.
Brian O’Keefe, head of engineering research at Commerzbank, said only a few listed engineering companies are likely to attract investors, even if the economy starts to recover.
He believes most UK firms are too small to compete globally. Large firms such as brakepads-to-nappies group BBA and controls group Invensys have become successful by buying into new areas or cutting costs.
The rest of the sector is likely to suffer from its cyclical image, even during an upswing, O’Keefe said.
But cyclical stocks may be making a comeback. TI Group, Babcock, Rolls-Royce and British Steel have been tipped recently as `buys’.
Andrew Hollins at Dresder Kleinworth Benson said UK-based firms have been buying aggressively overseas. `You may find the sector expands.’