Manufacturing SMEs optimistic about post brexit opportunities

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Almost half of SMEs (49%) across the manufacturing sector have aspirations for growth over the next three months, compared with only 31% six months ago immediately after the EU referendum, according to the new quarterly research from Hitachi Capital's British Business Barometer.

The percentage of SMEs anticipating decline is also down from 12% to 9%, suggesting improved levels of confidence within the sector.

At the same time, this sector is one of the most likely among the 15 surveyed to be reliant on overseas markets. While 52% anticipate growth in the next 12 months coming from the UK, nearly a third of small businesses in the manufacturing sector (32%) plan to expand into overseas markets to achieve growth.

The EU (excluding the UK) was the next most important market, with 33.2% of manufacturing SMEs seeing the potential for growth here in the year ahead. However, only a fractionally smaller percentage of businesses saw the potential for growth in the North American market (32.7%), which came a close third.

Tellingly, the manufacturing sector was the most likely to see opportunities from leaving the EU (70%) – far higher than other sectors including Media (40%) Education (41%) and Construction (42%). Half the manufacturers surveyed cited three or more reasons to be optimistic, suggesting their conviction in this belief.

More than a third (37%) considered the weak pound sterling as good news for exporting and building an overseas market share, 31% saw less red tape holding back their business as positive and 28% felt UK consumers were more likely to buy from British businesses as a result of leaving the EU.

Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance comments: "Confidence levels among SMEs in the manufacturing sector took a dip around the time of the Brexit vote. However levels have now bounced back to higher than those of a year ago. While the EU market remains key to manufacturing SMEs' potential for growth, those offered by other markets – particularly if new deals are struck with Australia, the US, Canada and so on – have a new significance, which is hinted at in these results.

"SMEs have the ability to adapt quickly when required and what we are seeing overall – whether or not this reflects their own political beliefs – is a drive to make the best of any outcome to the Brexit situation.

"In this case, 70% of manufacturing SMEs are able to see the positives in the current climate, be it the weaker pound or a potential reduction of red tape, which no doubt are contributing factors to current levels of confidence."

Confidence levels among SMEs in the Manufacturing Sector

  2017 2016
  Q1 Q4 Q3 Q2 Q1
Significant expansion 8% 9% 5% 6% 6%
Modest organic growth 41% 52% 25% 36% 41%
Stay the same/ no change 41% 32% 54% 45% 39%
Contract/ scale down 6% 5% 7% 4% 6%
Struggle to survive 3% 2% 5% 6% 5%
           
Net Growth 49% 61% 31% 42% 47%
Net Decline 9% 7% 12% 10% 11%

 

SME findings for business outlook for the next three months across the sectors

    Significant expansion Modest/organic growth No change Contract/
scale down
Struggle to survive
1. Financial Services 13% 43% 38% 4% 0%
2. Finance & Accounting 10% 41% 39% 8% 1%
3. Manufacturing 8% 41% 41% 6% 3%
4. Education 9% 36% 43% 8% 1%
5. Media 8% 37% 39% 10% 6%
6. IT & telecoms 8% 35% 43% 10% 2%
7. Real estate 8% 34% 50% 5% 2%
8. Medical & health services 12% 27% 44% 9% 4%
9. Hospitality & leisure 6% 33% 51% 2% 7%
10. Retail 2% 32% 46% 5% 12%
11. Construction 3% 29% 56% 9% 2%
12. Agriculture 7% 24% 52% 10% 5%
13. Transport & distribution 2% 20% 62% 8% 8%

 

Regions that SMEs in the Manufacturing sector that see potential for business growth over the next 12 months

Findings

The findings are from the quarterly Business Barometer by Hitachi Capital Business Finance, which tracks continuity or change in SME confidence across the UK.

2017 – Q1 figures: The poll asked 1,213 SME decision makers what their business outlook was for the three-month period to the end of April 2017, which regions offer potential growth for business over the next 12 months and what opportunities there will be as a result of leaving the EU.

2016 – Q4 figures: Total sample size was 1,006 Decision makers in small businesses. Fieldwork was undertaken between 3rd - 11th October 2016.  The survey was carried out online. The figures have been weighted and are representative of business size.

2016 – Q3 figures: Total sample size was 1123 adults. Fieldwork was undertaken between 11th - 20th July 2016.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).

2016 – Q2 figures: Total sample size was 1139 Decision makers in small businesses. Fieldwork was undertaken between 4th - 13th April 2016.  The survey was carried out online. The figures have been weighted and are representative of business size.

2016 – Q1 figures: Total sample size was 1178 decision makers in Small Businesses. Fieldwork was undertaken between 11th - 22nd January 2016.  The survey was carried out online. The figures have been weighted and are representative of company size.

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