SME manufacturers and engineers remain broadly optimistic and confident about future growth, despite the uncertainties around Brexit, rising production costs and skill shortages. These are the findings of the recently published 2018/19 MHA Manufacturing and Engineering Report.
The findings of this year’s survey were gathered by Sussex and Gatwick-based chartered accountants, tax and business advisers, MHA Carpenter Box along with their national association MHA.
The report draws on the national and regional insights from over 200 clients and contacts. It identifies opportunities and concerns facing UK manufacturing and engineering businesses and, despite uncertainties over Brexit, 71% reported that they achieved revenue growth over the last 12 months and 78% predict business growth over the next 12 months; for the South Coast, this figure is slightly lower at 60%.
The Report highlights that 58% of respondents export products and all of them export to the Eurozone but, interestingly, only 30% of respondents nationally cite Brexit uncertainty and trading tariff concerns as their main barrier to future success. Only 34% of respondents have a post-Brexit strategy in place and 66% report that they cannot plan for the impact of Brexit until they know the Government’s strategy and EU response.
Ninety two percent of respondents expect their production costs to rise over the next 12 months, but 67% intend to absorb any price increases through improved productivity and efficiency, rather than pass them onto customers.
In the South, staff retention and recruitment are even bigger issues this year than last year with 89% of respondents finding it difficult to recruit staff; this figure is 81% nationally. In addition, 27% of respondents in the South are already losing staff to the Brexit effect, with the national figure standing at 20%.
Although not covered in the survey, there is also anecdotally a growing concern in the South around the lack of availability of commercial/factory space for both new and expanding businesses. It is also disappointing to see the survey’s finding regarding R&D tax credits as many businesses fail to make a claim despite the scope of the relief available.
MHA Carpenter Box Partner Chris Coopey, Head of Manufacturing at the firm, commented: “It is good to see that our manufacturers and engineers are remaining positive and optimistic about the future despite the uncertainties of the last two years around Brexit. That uncertainty is unlikely to dissipate any time soon, but I have no doubt that the sector will cope with whatever barriers appear.
“Without doubt, the long-standing issue of skill shortages in the sector has been made worse by Brexit and this is an issue we will be looking to address at our next meeting of the Manufacturing Engineering and Technology Alliance (METALL #10) on 11th April. At this meeting we will be bringing business and education professionals together to discuss the important role that schools and colleges can play in raising awareness of the great career opportunities there are in manufacturing and engineering for students wishing to pursue STEM subjects.”