UK SME manufacturers continue to grow and build resilience

The latest MHA Manufacturing and Engineering Report confirms SME 2018/2019 revenue continued to grow, with the food, drink and tobacco sector leading the way at 13.14%.

MHA - the UK-wide group of accountancy and business firms - in its analysis found that while global economic conditions, Brexit/future trading tariffs and staff shortages impacted growth, SMEs remain buoyant and they’re building resilience by increasing their assets, reducing borrowing and re-evaluating supply chains.

Having taken a quantitative and qualitative approach to this year’s Report, the content is broader. Working with its Data Insights team, MHA compared feedback from 1000+ UK manufacturing and engineering SMEs with over 230 client responses, creating a national, yet detailed, financial picture of this sector. 

Financial data Client data
4.1% revenue growth, down from 11.2% in 2017 39% cannot plan until Brexit outcome known and 82% have evaluated supply chain risks  
£10.49bn held in net assets, £9.97bn in 2017 39% feel a lack of infrastructure and financial backing leaves them unable to plan for 4.0 or Robotic Process Automation
Net borrowing down 58% 68% have measures in place to reduce their environmental impact
Two sectors hit hardest for revenue growth are machinery, motor and transport at -10.39% and coke, petroleum & chemical at 6.16%  78% report difficulties recruiting skilled staff and 55% will invest in training and upskilling current staff  

The Report, now in its eighth year is supported by Lloyds Bank Commercial Banking in association with the Institution of Mechanical Engineers. 

Chris Barlow, Head of the Manufacturing Group at MHA, comments: “One of the most striking findings of this Report is the confidence of the manufacturing and engineering sector and predictions for growth, given the backdrop of Brexit uncertainties and the continuing skill conundrum.

“With the new Conservative government elected on a promise to ‘get Brexit done’, we’re starting to see greater optimism as ever-resilient and evolving manufacturers, who have ‘shored-up’ their financial positions, begin to release the brakes. That said, it’s clear the continued complexity and shape of any final Brexit deal has impacted respondents, and because of this uncertainty, we continue to advise clients to 

review their supply chains and look at ways to strengthen them, such as securing Authorised Economic Operator status to reduce potential customs delays.

“It’s also great to see Research & Development is a priority; 65% of respondents plan to invest up to 8% in this area and there’s huge scope here, plus financial benefits, as experienced by 48% who successfully applied for tax credits.”

Dave Atkinson, UK head of manufacturing SME and Mid-Corporate, Lloyds Banking Commercial Banking continues: “UK manufacturers’ resilience is demonstrated once again by these findings. The sector is a lynchpin of our economy and it’s encouraging to see many have continued to deliver growth through what has been a challenging period.  

“It’s somewhat unsurprising to see access to skills highlighted as an issue. We know it’s something the sector is working hard to address and having the right talent can be crucial to unlocking greater productivity. It’s for these reasons we support the Advanced Manufacturing Training Centre in Coventry. Our 10-year sponsorship will enable the training and upskilling of more than 3,500 manufacturing apprentices, graduates and engineers by 2024.” 

Matt Rooney, Engineering Policy Adviser at the Institution of Mechanical Engineers, concludes: “The IME is delighted to once again partner with MHA and Lloyds to produce this Report. It provides a useful snapshot of the state of the sector at a crucially important period for the UK’s SMEs. 

“The Report highlights the challenges ahead for the UK’s manufacturing industry, including rapid technological change, regulatory uncertainty and a seemingly perennial skills shortage. However, an increasing focus by the Government on industrial strategy and decarbonisation presents opportunities and I’m confident that in this environment, the industry will innovate and thrive to help deliver clean economic growth.”

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