Close Brothers Asset Finance surveys around 1000 small and medium-sized business owners three times a year across its key sectors, asking them a variety of questions.
In this article, Close Brothers Asset Finance takes a close look at the views of those firms in the Manufacturing and Engineering sector – including Woodworkers. Where appropriate, the UK average will be included to provide high-level context.
Finance
On average, 80% (UK: 73%) of Manufacturing and Engineering SMEs plan to seek funding for business investment in the next 12 months. 47% (UK: 43%) of Manufacturing and Engineering SMEs are confident the economy will grow in the coming 12 months, against 45% (UK: 46%) who expect a further slowdown of economic activity. The rest anticipate no change. 35% (UK: 36%) of Manufacturing and Engineering firms expect to grow in the coming year; 54% (UK: 54%) will tread water while 9% (UK: 9%) will contract.The top five concerns for Manufacturing and Engineering businesses, currently, are:
- Energy costs
- Inflation
- Interest rates
- Materials supply
- Cash flow
Manufacturing and Engineering firms’ main business priorities at the moment are:
- Achieving growth: 36%
- Developing our products/services: 17%
- Business consolidation: 15%
- Survival: 11%
- Investing in staff: 11%
- Paying down debts: 8%
Late payments are an issue for 56% (UK: 51%) of M&E firms.Inflation
53% (UK: 48%) of M&E SMEs think inflation has peaked; 35% say ‘no’ with the rest unsure.The four biggest impacts of inflation are:
- Raising of prices and passing them onto customers
- Increased wages to support employees
- A negative impact on cashflow
- Some businesses have chosen to absorb cost increases rather than pass them onto customers
42% (UK: 40%) of M&E SMEs think the Bank of England’s aim to get inflation below 5% by the end of the year is realistic; 45% don’t agree, and the rest are unsure. 48% (UK: 46%) of M&E firms have experienced lower demand for their products & services because of higher inflation against 36% (UK: 32%) who have seen an uplift; the rest have felt no impact.Cost of borrowing
54% (UK: 53%) have seen an increase in their cost of borrowing; 37% (UK: 38%) haven’t, and the rest are unsure. 45% (UK: 36%) of M&E SMEs have switched funders because of increased interest rates. 57% (UK: 51%) have considered alternative forms of finance because of increased interest rates. 42% (UK: 39%) think interest rate rises have peaked while 42% (UK: 45%) do not. 62% (UK: 59%) have had to increase their prices to cover the increased cost of borrowing.Insolvencies
63% (UK: 55%) of M&E SMEs are concerned about rising company insolvencies in their supply chain. The 5 most popular measures firms are taking to ensure their firm remains solvent are:- Cutting costs
- Improving efficiency
- Seeking new funding
- Taking out insurance
- Considering refinancing their assets
45% (UK: 43%) of M&E firms have seen a rise in mergers and acquisitions in their sector over the past 12 months.For more industry insights, visit closeassetfinance.co.uk/woodworking
