cornwall quarterly economic survey 4th quarter 2017...• 4th quarter economic survey of 2017 • in...

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Cornwall Quarterly Economic Survey4th Quarter 2017

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• Questionnaire specified and designed by British Chambers of Commerce

• 4th Quarter Economic Survey of 2017

• In Cornwall: Sample drawn from Chamber members and non-membership organisations 41st survey for Cornwall Chamber 97 completed surveys overall. 83 respondents recruited using Chamber member

messaging (M2M newsletter and bespoke direct mail), and promotion throughCornwall Chamber Networking events. 14 members recruited via telephone followup interviewing.

Survey data submitted to the British Chambers of Commerce (BCC) within 24 hoursof the survey closing

6 non-members provided responses, of which 3 have requested further informationabout Cornwall Chamber

The Survey

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Business Confidence and Performance

• 48% of respondents say they are operating at full capacity, up from last quarter (41%), 41% operating below capacity (down from last quarter, 54%). The balance on expectation for change in turnover has gone from 64% in Q3 2017 to 67% in Q4 2017 (i.e. those expecting an increase less those expecting a decrease). Expectation of profitability increased, with the balance up from 41% to 47%.

• UK Sales have increased (net balance of 46% compared to 33% in the last quarter), and 42% reported an increase in UK Orders/advanced bookings (net balance of 36% compared to 21% in Q3 2017.)

• 25% of Q4 participants are exporting. About 38% of these (or 9% of all businesses) report increases in overseas sales this last quarter and 25% (or 6% of all businesses) report increases in advanced export orders.

• 82% are confident about their cash flow position, which has stayed the same (43%) or improved (39%), marking an increase since last quarter.

• Investment in training has slightly increased with a balance of 30% having investment plans for training compared to 27% in Q3 2017. Investment in plant and equipment deceases against Q3 2017, with a net balance of 19% compared to 22% in Q3 2017.

QES Headlines (1)

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Market Pressures

• 75% are experiencing pressure to raise prices, down from 77% in Q3 2017. 37% expect to increase their prices this next quarter (up from 23% in Q3).

o Reasons for increasing prices comes from across the board, with 43%attributing to increases in material prices (up from 26%), 20% to finance costs (up from 10% in Q3 2017), 21% to pay settlements (up from 15% in Q3 2017), and 46% (up from 26% in Q3) to other overheads.

• 79% reported external pressures (slightly up from Q3 at 77%) with a high increase in competition (41%, up from 29% in Q3). Interest rates are up from 13% in Q3 to 37% in Q4:

o Exchange rates – 24% (26%)o Inflation – 42% (27%)o Competition – 41% (29%)o Taxation – 33% (32%)o Business rates - 23% 237%)o Interest rates – 37% (13%)

QES Headlines (2)

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Workforce and Recruitment

• In terms of change to workforce, 36% say they have increased their workforce (down from Q3 with 42%) and 11% have decreased their workforce (up from 4% in Q3).

• Looking to the next quarter some increase is predicted, with 45% (37% at Q3) expecting to increase workforce and at the same time 4% (down from 8% in Q3) predicting a decrease. 48% do not foresee any changes to their workforce at this point.

• The proportion attempting to recruit has remained constant with 53% (54% at Q3). Of those, 59% - similar to Q3 (61%) and 2016 Q4 (57%) - have experienced difficulties recruiting the right people. The positions businesses were looking to fill remain principally full-time and permanent posts, and decreasingly part-time:

QES Headlines (3)

o Skilled Manual/Technical – 41% (61%)o Professional/Managerial – 69% (61%)o Clerical – 25% (24%)o Semi/Unskilled – 25% (27%)

o Full time – 84% (94%)o Part time – 35% (29%)o Permanent – 47% (53%)o Temporary – 24% (23%)

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London Visits

• 71% of businesses travel to London on business and of those 61% do so six times or more a year.

• A generic Cornwall base in London would be useful to 36% of businesses with a third of those saying they would likely use it at least monthly.

• 18% of business already have a London base.

QES Headlines – Omnibus Questions

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3%

15%

20%

62%

2%

5%

19%

76%

2%

18%

16%

64%

200 and over

50 - 199

20 - 49

0 - 19

Number of Employees

This quarter (Q4 2017)

Last year (Q4 2016)

Last quarter (Q3 2017)

Q. How many people do you employ at your site?

Sample Profile

Representing 3,439 employees (incl. sole-traders) splitting into

2,145 men (62%) and 1,294 women (38%)

8

5%

3%

0%

0%

2%

8%

5%

12%

10%

6%

7%

49%

4%

4%

1%

2%

2%

12%

4%

12%

10%

6%

8%

35%

16%

2%

3%

1%

1%

7%

5%

7%

10%

3%

4%

39%

Other sector

Construction

Manufacture of E or IT Goods

Transport/Distribution

Raw Material Production, etc

Consumer Services

Public/Voluntary Sector Services

Manufacture of other goods

Marketing/Media

Retail/Wholesale

Hotels/Catering/Leisure

Professional Services

This quarter (Q4 2017)Last year (Q4 2016)Last quarter (Q3 2017)

Q. What is your main business activity?

Business Activity

8

9

10%

14%

30%

47%

6%

15%

37%

42%

8%

6%

34%

52%

NotApplicable

Decreased

No Change

Increased

Overall UK Sales

This quarter (Q4 2017) Last year (Q4 2016) Last quarter (Q3 2017)

32%

10%

26%

31%

21%

15%

32%

32%

25%

6%

27%

42%

NotApplicable

Decreased

No Change

Increased

Overall UK Orders

Q. Excluding seasonal variations, over the past 3 months… (i) UK sales/custom/bookings have.. (ii) UK orders/advance custom/bookings have..

Quarterly Change in UK Sales and Orders

10

70%

6%

15%

9%

74%

4%

12%

9%

75%

4%

11%

9%

NotApplicable

Decreased

NoChange

Increased

Overall Export Sales

This quarter (Q4 2017) Last year (Q4 2016) Last quarter (Q3 2017)

73%

4%

12%

10%

78%

4%

10%

8%

77%

6%

11%

6%

NotApplicable

Decreased

No Change

Increased

Overall Export Orders

Q. Excluding seasonal variations, over the past 3 months… (i) Export sales/custom/bookings have.. (ii) Export orders/advance custom/bookings have..

Quarterly Change in Export Sales and Orders25% export to overseas markets (38% of these use Cornwall Chamber to process their export documentation.)

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4%

4%

50%

42%

8%

6%

64%

22%

2%

11%

51%

36%

NotApplicable

Decreased

No Change

Increased

Quarterly Change in Workforce

This quarter (Q4 2017) Last year (Q4 2016) Last quarter (Q3 2017)

4%

8%

51%

37%

9%

5%

66%

19%

2%

4%

48%

45%

NotApplicable

Decrease

No Change

Increase

Expected Quarterly Workforce Change

Q. Over the past 3 months… (i) has your workforce.. (ii) do you expect your workforce to..

Workforce Changes and Expectations

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23%

53%

29%

94%

16%

24%

36%

74%

24%

47%

35%

84%

Temporary Jobs

Permanent Jobs

Part Time Jobs

Full Time Jobs

Attempted to Recruit …

This quarter (Q4 2017)

Last year (Q4 2016)

Last quarter (Q3 2017)

Tried to Recruit, 53%

Not Tried, 36%

Not applicable,

11%

Last quarter(Q3 2017)

54%

Last year(Q4 2016)

36%

Q. Have you tried to recruit staff over the past 3 months?Q. If you have tried to recruit staff… were they for…

Staff Recruitment

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No, 41% Yes, 59%

Difficulties RecruitingSuitable Staff

Last quarter(Q3 2017)

61%

Last year(Q4 2016)

57%24%

27%

61%

61%

34%

26%

54%

48%

25%

25%

41%

69%

Clerical

Semi / Unskilled

SkilledManual/Technical

Professional /Managerial

Tried to Recruit…

This quarter (Q4 2017) Last year (Q4 2016) Last quarter (Q3 2017)

Q. If you have tried to recruit staff… Did you experience any difficulties finding suitable staff?Q. For which of the following categories of employee have you tried to recruit?

Staff Recruitment

14

14%

17%

37%

33%

4%

22%

43%

31%

6%

11%

43%

39%

Not Applicable

Worsened

Remained theSame

Improved

Quarterly Cashflow Changes

This quarter (Q4 2017) Last year (Q4 2016) Last quarter (Q3 2017)

14%

6%

57%

23%

4%

3%

52%

42%

6%

1%

56%

37%

NotApplicable

Decrease

RemainConstant

Increase

Expected Quarterly Price Trends

Q. Over the past 3 months has your cashflow…Q. Over the next 3 months do you expect your prices to…

Cashflow Change and Price Expectations

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12%

3%

55%

30%

19%

9%

52%

20%

10%

2%

56%

32%

Not Applicable

Decrease

Remain theSame

Increase

Planned Investment: Training

This quarter (Q4 2017) Last year (Q4 2016) Last quarter (Q3 2017)

32%

4%

37%

26%

29%

11%

45%

15%

32%

3%

43%

22%

NotApplicable

Decrease

Remain theSame

Increase

Planned Investment: Plant and Equipment

Q. Have your investment plans for Training…Q. Have your investment plans for Plant/Machinery/Equipment…

Investment Intentions

16

10%

50%

41%

8%

54%

38%

10%

41%

48%

Not Applicable

Below Capacity

Full Capacity

This quarter (Q4 2017)Last year (Q4 2016)Last quarter (Q3 2017)

Q. Are you currently operating at...

Operating Capacity

17

4%

7%

17%

71%

1%

12%

22%

65%

2%

6%

19%

73%

Not Applicable

Decrease

Remain theSame

Increase

Turnover - Expectations for Next 12 Months

This quarter (Q4 2017) Last year (Q4 2016) Last quarter (Q3 2017)

8%

15%

22%

56%

2%

14%

29%

55%

5%

12%

24%

59%

NotApplicable

Decrease

Remain theSame

Increase

Profitability - Expectations for Next 12 Months

Q. Do you believe that over the next 12 months… (i) Turnover will.. (ii) Profitability will..

Business Confidence

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26%

10%

15%

26%

55%

19%

32%

57%

46%

20%

21%

43%

Other Overheads

Finance Costs

Pay Settlements

Price of RawMaterials

This quarter (Q4 2017)

Last year (Q4 2016)

Last quarter (Q3 2017)

75% of 2017 Q4 respondents are suffering pressures to raise prices (77% at 2017 Q2 and 65% last year at 2016 Q4.)

Q. Is your business currently suffering pressures to raise its prices from any of the following? (Please tick all that apply.)

Pressure to Raise Prices

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79% of 2017 Q3 respondents identified one or more of the above as issues of concern,compared to 77% for 2017 Q3 and 76% for last year 2016 Q4.

27%

13%

27%

26%

32%

29%

42%

19%

24%

45%

32%

36%

42%

37%

23%

24%

33%

41%

Inflation

Interest Rates

Business Rates

Exchange Rates

Taxation

Competition

This quarter (Q4 2017)Last year (Q4 2016)Last quarter (Q3 2017)

Q. Please indicate which of these following factors are more of a concern to your business than 3 months ago. (Please tick all that apply.)

External Business Concerns

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Q. Do you (or colleagues) visit London on business? Q. Approximately how many times a year?

London Visits

No, 29%

Yes, 71%

Visit London on Business

4%

4%

32%

25%

34%

Don't know

50+ times a year

11 to 50 times a year

6 to 10 times a year

Up to 5 times a year

Times Travelled to London per Year

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Q. Would a generic Cornwall base in London be useful to your business? Q. How often do you think you would use it?

London Base

36%

36%

18%

10%

No Yes Already have a London base Don't know

9%

60%

29%

3%

Don't know

A few times a year

At least monthly

At least weekly

Likely frequency of use of a generic London base

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Q. Please use this space to make further comments regarding the issues covered in this survey.

Final Comments (1)“Funders are increasingly limiting funding to projects which makes it more difficult to cover day to day running costs.”“It would be really useful if this survey used Social Enterprise as a term. We are a business although vary from a regular business but we are not voluntary sector as we are registered with Companies House as a CIC. This small change would also indicate / send a strong message to all businesses accessing the survey that the Chamber recognises Social Enterprise in Cornwall in its own right..”“Looking to the future, availability of premises for expansion will be my main worry.”“My business costs are the costs of my staff so when they increase their costs my costs increase.”“We are quite optimistic.”“Our work is contract based.”“We have seen business pick up significantly since the slowdown we experienced following the EU referendum vote and Trump election. Our clients' projects are going ahead again and our growth is back on track. However we are starting to be concerned about what a no-deal Brexit might bring (another slowdown?) and are frustrated at the lack of impact assessments or guidance from UK government. We would welcome the Cornwall Chamber bringing pressure on the government to publish their impact reports.”

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Q. Please use this space to make further comments regarding the issues covered in this survey.

Final Comments (2)“Overregulation makes the social care sector frightening for good managers who get burned out. Recruitment for care staff posts is an increasing challenge due to low unemployment in Cornwall; tax credits limit staff ability to work full time; lack of ambition and aspiration among too many school leavers today (in contrast to a few years back); lack of support via school careers preparation such that care is seen as the option of last resort; lack of childcare for good carers for out of hours working - and care isn't just needed during school hours. Media negativity prevents many choosing care as a career, despite the fact that there are incredible career prospects (and some incredible salaries and opportunities too) for motivated school leavers who want to progress, and it's a good starter for those who for various reasons may have left school with little formal qualifications as they can achieve these and develop 'on the job' at any age.”“The big threat to us remains the uncertainty, worse, confusion, over Brexit. We can relocate to Holland or Belgium pretty easily. That means can keep our UK based clients and rehire our EU nationals who decided to return home. The more this pantomime continues and the government continues to implode, the UK is becoming a laughing stock.”

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Q. Please use this space to make further comments regarding the issues covered in this survey.

Comments – re: London Base“A collective presence in London makes huge sense. We need to be thinking how best to develop our markets regionally, nationally and internationally post Brexit and a Cornish collegiate effort would make tremendous sense.”“An extended office for Cornwall businesses in London, Bristol or other big city will be a good opportunity for us. I am from abroad and at the moment I try by myself to built a bridge between Cornwall and Isle of Scilly and [overseas]…”“I suspect [for] other Cornish organisations a London base might be useful -particularly smaller businesses.”“I think that prices will increase by at least 5%. And we want to travel to parts of the UK except London.”“Is this Cornish office in London a really effective use of resource and indeed necessary?”“We have invested a business improvement plan so we don't undersell our products and so we are now more productive and able to fund more product development. I have had to change attitudes. The biggest challenge with travelling to London is the travel - in terms of the cost and the time involved. I have been to the Institute of Directors in the city and there is nothing about .”“Ya mar pleg! Yes please to a Cornish Embassy in London!”

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The Cornwall QES is managed on behalf of the Cornwall Chamber by PFA Research Ltd

Cornwall Quarterly Economic Survey4th Quarter 2017

PFA Research LtdTremough Innovation CentrePenrynTR10 9TA

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