Research reveals a worrying trend within UK manufacturing

The figures were released in the Creditsafe Watchdog Report, which tracks quarterly economic developments across the manufacturing sector in addition to 11 other sectors (farming and agriculture, construction, banking and financial, hospitality, IT, professional services, retail, sports and entertainment, transport, utilities, wholesale).

The gloomy findings for the sector, in which sales revenues dropped by over £11bn to stand at £649.8bn in Q2, were further underlined by a significant 33% increase in bad debt owed to manufacturing companies. Bad debt rose to £15.6m, where in Q1 it was at £11.8m. In addition, the number of new startups in the sector also fell by 14% to 4,935.

Brighter spots for the UK’s makers were that the amount of bad debt owed by them to their suppliers fell by over a quarter to £28.7m. Furthermore, whilst the number of business failures jumped higher, the number of manufacturers with CCJs against them fell by 15% from just over 1,000 to 856.

Rachel Mainwaring, Operations Director at Creditsafe, commented: “Figures in today’s Creditsafe Watchdog reveal that it has not been a good second quarter for our all-important manufacturing sector. The picture nationally across sectors is of business confidence slumping, with sales down and bad debt up, and manufacturing is a prime example of this.

“Manufacturers have at least made good progress in bringing down their own bad debts owed to suppliers, a sign that they are focusing on effective cash management. But they need a strong third quarter to steady the ship and bolster national productivity.”
Creditsafe’s research also revealed the risk level of insolvency for businesses operating within the manufacturing sector. Of the 174,363 currently active companies, seven percent (12,300) are classified as being at very high or high risk.