Pedestrian productivity puts pressure on Manufacturing Barometer

SMEs anticipate increased sales and profits over the next six months, but must improve productivity by unlocking ‘their own hidden potential’ says latest National Manufacturing Barometer.

Manufacturing Barometer

The quarterly survey, which is conducted by SWMAS (part of Exelin Group) in partnership with Economic Growth Solutions (EGS), asked 320 manufacturing SMEs to discuss performance, with a focus on productivity and the extent to which it is engrained in manufacturing business culture.

Nearly three-quarters of respondents (72 per cent) said they anticipate an increase in sales in the next six months, and 59 per cent said they were expecting increased profits in the same period of time.

However, as only 45 per cent of manufacturers experienced an increase in profits in the second half of 2017, the gap between anticipated sales growth and actual recent improvements in profits continues to raise questions about productivity, especially the ability of manufacturers to meet their own growth targets.

More than half (56 per cent) of manufacturers indicated that they aimed to deliver against their growth targets by investing in machinery and premises; a rise of 13 per cent on the last report.

A further 48 per cent of respondents said they planned to recruit new staff, which is two per cent higher than the same time last year. This suggests that improving productivity through the existing workforce and facilities remains the key focus.

The latest Manufacturing Barometer survey also explored the extent to which manufacturers have integrated productivity into their business and workplace culture.

Around 70 per cent are confident that productivity is ingrained at a strategic level but almost half indicated they would like to achieve better, and sustainable, productivity improvements.

Simon Howes, CEO of Exelin Group, said: “Confidence levels are riding high in the manufacturing sector despite market uncertainties, demonstrating the strength and resilience of our SME manufacturers.

“The Barometer does, however, illustrate there is a definite gap between many manufacturers’ expectations about future performance and their ability to deliver the productivity gains required to drive sales and profit growth.

“Our special focus on productivity and culture suggests that while many firms have successfully embedded productivity good practice at a strategic, leadership and management level, there remains a stumbling block in actually delivering lasting productivity improvements. In short, manufacturers have to look harder at how they engage their workforce to unlock their own hidden potential – and so achieve their sales and profit ambitions in the process.”

Michael Gibbs, managing director of Redruth-based spring manufacturer European Springs & Pressings, added: “These findings speak volumes. To have two-thirds of UK SME’s forecasting continual growth in their order books – alongside increasing profits – confirms the UK’s recent rise up the rankings to the eighth largest manufacturer in the world.

“It’s encouraging to see the sector also focuses on efficiencies through management and lean manufacturing processes to counter external price rises.”

The Manufacturing Barometer is the largest survey conducted of SME manufacturers in the UK and asks senior decision makers for their views on factors influencing business performance and the future of the sector.