UK manufacturing small firms set for major infrastructure investment as sector hits ‘record highs’

Study reveals 86% of firms set to invest in new equipment over coming year

Small and medium-sized firms in the UK’s manufacturing industry are set for a major outlay on new equipment over the coming months, as the sector prepares to meet record levels of new demand.

The Manufacturing Advisory Service (MAS), a government body dedicated to supporting the sector, released its latest Barometer this week, which found that 86% of respondent manufacturing firms were planning to invest in capital equipment over the next twelve months.

The poll of 864 manufacturing small and medium-sized firms across the UK covering the last quarter of 2013 found that companies planned to spend an average of £121,000 on new equipment, with around two-thirds of the firms questioned looking to purchase new plants and machinery.

In addition, just over half planned to upgrade their IT/communications infrastructure, with around a third focused on improving their business premises.

MAS said this widespread intention to invest in infrastructure was linked to the growth of the manufacturing sector as a whole.

62% of companies reported an increase in sales over the last six months – an increase of 6% on the previous report – whilst 76% of businesses expected to boost sales between now and June 2014.

The report also revealed what MAS called a ‘striking’ change of attitudes towards recruitment. For the first time since the Barometer launched in 2012, more than half (53%) of firms planned to take on staff over the next six months, marking a 14% rise on the previous report.

Business and energy minister Michael Fallon commented on the report: “These figures point towards signs of a renaissance in manufacturing. SMEs are increasing in confidence, and looking to both recruit and invest.

“We’re committed to working closely with the manufacturing sector to provide a strong base for the recovery, and create growth for the future.”

Steven Barr, head of MAS, added: “There is a definite feel good factor around English manufacturing at the moment and these latest figures reinforce other positive reports from the sector.

“Investment is crucial if we are going to take advantage of reshoring and predicted growth in markets such as offshore wind, renewables and low carbon vehicles.

“The employment data makes for very interesting reading. Despite previous Barometers showing optimism in sales, investment and new technology, the number of firms planning to recruit has remained fairly consistent at around 40% over the past year.

“This was understood to be because companies were retaining staff during the slowdown in the hope that volumes would return. With so many firms confident of growth it could be that manufacturers are now looking to increase capability and capacity, or perhaps are looking to attract employees with different skills.”

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