Manufacturers can realise success during recovery

By LBV

24 Nov 2010

Despite being one of the hardest hit sectors during the recession, statistics suggest that UK manufacturing is on the road to recovery.

The Engineering Employers Federation (EEF) is estimating 3.8 per cent growth in manufacturing in 2010 compared with 1.1 per cent for the rest of the economy, while in May, UK manufacturing saw the fastest rate of growth in the last 15 years, according to the Office of National Statistics.

At present, almost all of the conditions for this recovery are in place. While investment in capital expenditure fell dramatically during the recession, to the point where it barely covered the depreciation of assets, a notable rebound during the last eight months has seen company profitability improve.

Better lending conditions have allowed manufacturers to re-leverage their balance sheets, while improvements to cost control and efficiency have boosted cash reserves. In addition, funding via equity issue is resuming.

Despite these favourable conditions, the reality on the ground in areas like Lancashire is not so clear cut. Like the wider economy, confidence is key and, until manufacturers can be certain of consistent demand for their products, most will play it safe.

This lack of confidence has limited sector growth in comparison to the market high of two years ago, and will continue to stifle a recovery that is likely to be complex and fragile. In addition, the impact of the Government’s efforts to redress the deficit remains to be seen.

The outlook for Lancashire’s diverse and fragmented manufacturing industry is extremely difficult to gauge, with performance varying greatly between different sub-sectors and companies in the county.

Aerospace and defence, key industries in Lancashire, have held up reasonably well throughout the downturn. The typically long lead times for large projects have meant that many of these businesses have greater visibility over their future prospects. However, question marks remain surrounding how public sector cuts will affect this sub-sector.

Specialty chemicals companies in Lancashire have also held up well in the face of challenging economic conditions.

They have strong profit margins – dealing in outputs that remain uncommoditised – and taken advantage of efficiency improvement possibilities, which have allowed many to realise growth. There is, however, considerable global competition in specialty chemicals and Lancashire manufacturers are under pressure to complete the innovation cycle more quickly than ever before.

Conversely, the bulk chemicals sub-sector in Lancashire has fared less well. As a high cost, low margin business with notably less scope for efficiency improvements compared with specialty chemicals, the recession led to a number of site closures among bulk chemicals companies. In the medium term, the sub-sector is likely to continue to struggle as a result.

Despite economic pressures, manufacturers in Lancashire have the potential to perform well, even in a slowly recovering market. Manufacturing is growing globally, and the UK is no different.

This is providing a boost to exports. Furthermore, manufacturing IPOs could return over the next two years, as investor appetite turns to traditionally profitable, stable manufacturing shares.

The manufacturing sector tracks the UK economy and, until confidence returns to both UK businesses and consumers, the manufacturing recovery in Lancashire will be fragile and drawn out.

However, by focusing on sustainable efficiency improvements, cost control and value-added customer service and support, Lancashire manufacturers can enjoy success.

Mark Stephenson
Deloitte
 

Enjoyed this? Read more from LBV

Latest news

1

Fit-out begins at hospital's new £1.5m annex Greater Lancashire Hospital Annex

Fit-out begins at hospital's new £1.5m annex

13 Jun 2024

2

Ribbon cut on Blackpool's £23m tramway extension Blackpool Tram Extension Launch

Ribbon cut on Blackpool's £23m tramway extension

13 Jun 2024

3

Cala Gran Holiday Village secures Roadshow Security Cala Gran Holiday Village - Fleetwood.jpg.jpg

Cala Gran Holiday Village secures Roadshow Security

14 Jun 2024

4

Pension firm announces service expansion for businesses Paul Rowe Pro Start Pensions

Pension firm announces service expansion for businesses

14 Jun 2024

5

The fear of getting women's health in the workplace wrong symptoms.png.png

The fear of getting women's health in the workplace wrong

14 Jun 2024

Lbv116 Ltb Strip980
Background image for hub sign up block

LBV Hub

Reach 50,000 members of the Lancashire business community

Post your news
Post your events
Post your offers
Company profile
Social reach
Magazine coverage
Sign-up
Events
RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
11 Jun 2024 - 04 Dec 2024

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 16:30

Business Networking in Preston - BNI Brunch
EVENT LISTING SIZING Brunch .png.png
LBV Hub Networking
14 Jun 2024

Business Networking in Preston - BNI Brunch

Samlesbury Preston Hotel, Preston New Road, Preston, PR5 0UL

09:30 - 11:00

Chamber Annual Dinner
Chamber Logo1.png.png
LBV Hub Social
14 Jun 2024 - 14 Jun 2024

Chamber Annual Dinner

Morecambe Football Club, Morecambe, LA4 4TB

19:30 - 00:00

Business Networking in Blackburn - BNI Infinity
EVENT LISTING BNI Infinity.png.png
LBV Hub Networking
14 Jun 2024

Business Networking in Blackburn - BNI Infinity

Hampton by Hilton, 2 Frontier Ave, Blackburn, BB1 3AL

06:30 - 08:30

Liverpool City Region Business Expo
LCR 22 EXPO IMAGE.jpg.jpg
LBV Hub Exhibitions
14 Jun 2024

Liverpool City Region Business Expo

Exhibition Centre, Liverpool, L3 4DQ

09:00 - 15:00

Business Networking in Chorley - BNI Endeavour
EVENT LISTING SIZING Endeavour.png.png
LBV Hub Networking
18 Jun 2024

Business Networking in Chorley - BNI Endeavour

Oak Royal, Bury Lane, Chorley, PR6 8SW

06:30 - 08:30

Business Networking in Blackburn - BNI Vista
EVENT LISTING SIZING Vista.png.png
LBV Hub Networking
18 Jun 2024

Business Networking in Blackburn - BNI Vista

Hampton by Hilton, 2 Frontier Ave, Blackburn, BB1 3AL

06:45 - 08:30

Free 4 Week Growth Ignition Coaching Programme
UCLan Primary logo RKE.png.png
LBV Hub Seminars
19 Jun 2024 - 03 Jul 2024

Free 4 Week Growth Ignition Coaching Programme

Online, Preston, PR1 2HE

12:00 - 13:30

Bold Moves Mastermind - Procrastination to Profitable Pricing
BV Online Course Title pages (1).jpg.jpg
LBV Hub Seminars
19 Jun 2024

Bold Moves Mastermind - Procrastination to Profitable Pricing

Oswaldtwistle Mills Business & Conference Centre, Oswaldtwistle, BB5 0EY

09:30 - 12:30

Business Networking in Accrington - BNI Zeus
EVENT LISTING SIZING Zeus.png.png
LBV Hub Networking
19 Jun 2024

Business Networking in Accrington - BNI Zeus

The Mill House, Corn Mill Yard, Accrington, BB5 5HX

06:45 - 08:30

Business Networking in Preston - BNI Diamond
EVENT LISTING BNI Diamond.png.png
LBV Hub Networking
19 Jun 2024

Business Networking in Preston - BNI Diamond

The Marriot Hotel, Garstang Road, Broughton, PR3 5JB

07:15 - 09:00

Exclusive Free Event - An inspiring morning with Professor Paul McGee, The SUMO Guy
Paul McGee Event
LBV Hub Seminars
19 Jun 2024

Exclusive Free Event - An inspiring morning with Professor Paul McGee, The SUMO Guy

Village Hotel Blackpool , Blackpool , FY3 8LL

08:30 - 13:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV116 Online Graphic
Subscribe now

Weekly news bulletin