Member Article

Survey shows manufacturers upping investment game

Britain’s manufacturers have significantly increased their investment performance as they strive to improve productivity and take advantage of growing world markets, according to a survey released yesterday by EEF Northern, the manufacturers’ organisation.

However, the results also pointed to concerns ahead for small firms, following last week’s Bank of England report showing that lenders are now tightening their lending criteria. This is likely to hit disproportionately small firms as the survey showed that the lack of a long and stable track record was more of a hurdle for companies in that sector.

According to the survey, in the last year, over 53% of companies had increased investment, with 36% holding investment steady and only 11% proposing to cut back. The survey also shows that the quality of management decision making has improved. Since 2003 there has been a decline in the use of management discretion to block investment projects that have passed any technical criteria and, an increase in those receiving the green light, despite not meeting payback periods or hurdle rates.

Overall, the survey showed that there is no significant market failure for raising finance for manufacturing investment. However, EEF Northern believes more could still be done to support the competitive tax position address the needs of small and medium size companies.

EEF Northern Director Alan Hall said: “Manufacturing businesses are evolving rapidly and entering new markets, increasing innovation and investing overseas all impact on how companies choose to invest. This suggests recent gloom over official data showing sluggish investment levels may have been overdone, given the shift in focus away from capital intensive investment into intangible areas. “However, where barriers remain, they tend to be faced by smaller companies and we would be concerned at any moves to restrict lending because of the recent crisis in the financial markets.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .