mas measures - steve gerry consulting · latest mas barometer survey record a further trend...

MAS MEASURES Quarterly Survey Results (Q2)

July – September 2013

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2Quarterly Survey Results Q2 – July to September 2013


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ContentsIntroductionKey FindingsMAS Barometer Outlook Q2MAS Measuring TrendsSpecial Focus – Mapping Supply ChainsThe Manufacturer’s ViewpointThe Economist’s ViewpointKey Results for South WestMAS Barometer Outlook Q2 South WestMAS Measuring Trends South WestSpecial Focus – Mapping Supply Chains SWPostscriptHelp and Information

Mapping Supply Chains




Introduction

Welcome to the latest Manufacturing Advisory Service (MAS) Barometer, the report that collects the results, views and opinions of English manufacturing’s small and medium-sized enterprises (SMEs).

In my new role as the Head of the Manufacturing Advisory Service I am delighted that more than 500 senior directors took time out of their busy schedules to provide us with a comprehensive picture of economic conditions and issues faced by the sector over the three months from July to September 2013.

The results come only a few weeks after encouraging data from the CBI and Office for National Statistics pointed to a continuing economic upturn.

I’m pleased to say England’s manufacturing SMEs are doing more than their share of the work towards economic recovery, with 56% enjoying an increase in sales – a 3% increase on the previous quarter.

Two thirds of respondents are expecting to grow and, importantly, we are seeing more companies invest in new technology and premises/machinery.

In fact, at 51%, the latter is at its highest level since the Barometer began two years ago and is a 10% rise on the same period last year.

Our focus for this survey was on the topical issue of bringing production back to the UK.

We wanted to examine if the anecdotal information our advisors were hearing on the ground was reflective of industry in general. The results suggest that an increasing number of firms are planning to, or considering, re-shoring production.

It appears that cost, quality and lead times are the principal reasons why manufacturing SMEs are making this decision, although there are concerns about the price of labour and the availability of skills.

By collecting opinions and results, the Barometer continues to play an important role within manufacturing and will serve to stimulate action and debate as we embrace the challenges and opportunities that lie ahead for our sector.

Steven BarrHead of the Manufacturing Advisory ServiceNovember 2013

Steven BarrHead of the Manufacturing Advisory Service





Key Findings

Current Sales Turnover:56% of SME* manufacturers report increased sales turnover within the last 6 months

Q: Has your sales turnover changed within the past 6 months?

4 Increased4 Much Increased

Trends: This time last year 41% of respondents predicted an increase in investment in new machinery and premises; this year figure has increased to 51%

Q: Do you expect to increase investment in new machinery/premises in the next 6 months?

4 Increased4 Much Increased

Supply Chain:46% of companies supply directly to the end customer

Q: Tell us where your company sits within the supply chain?

Raw material processor Supplier to another manufacturer Supplier to final producer4 Direct to end customer

Production:In the past 12 month 15% of respondents have brought back or are bringing back production to the UK

Q1: Has your company brought any production back to the UK within the past 12 months?

4 Yes

Q2: Are you planning to bring production back to the UK?

4 Yes

*SME - Small and Medium-sized Enterprise

56%

Q22012/13

Q22013/14

END CUSTOMER

46% 15%




MAS Barometer Outlook Q2

Much Reduced

Reduced No Change

Increased Much Increased

Respondents

Has your sales turnover changed within the past 6 months?

3% 16% 25% 46% 10% 537

Do you expect your sales turnover to change over the next 6 months?

1% 6% 28% 60% 6% 515

How does your order book look compared with 6 months ago?

3% 16% 28% 48% 5% 529

Have your enquiry levels changed compared with 6 months ago?

2% 12% 34% 46% 6% 528

Do you expect staff numbers in your company to change in the next 6 months?

1% 6% 54% 38% 1% 535

Do you expect your investment in new machinery/premises to change in the next 6 months?

1% 3% 46% 44% 7% 536

What impact do you expect the low carbon economy will have on your business?

2% 7% 78% 11% 2% 532

Do you expect your investment in new technology to change in the next 6 months?

1% 1% 56% 38% 4% 537




MAS Measuring Trends

Q12012/13

Q12012/13

Q22012/13

Q22012/13

Q32012/13

Q32012/13

Q42012/13

Q42012/13

0%

100%

80%

60%

40%

20%

53% 45% 55%43% 62%47% 64%

To Date: Sales

SMEs reporting growth in previous six months

Future: Sales

SMEs predicting growth in next six months

Q42011/12

Q42011/12

54% 60%

Q12013/14

Q22013/14

Q12013/14

Q22013/14

67% 66%53% 56% 53%




Q12012/13

Q12012/13

Q22012/13

Q22012/13

Q32012/13

Q32012/13

Q42012/13

Q12013/14

Q22013/14

Q42012/13

Q12013/14

Q22013/14

Future: Capital Investment

SMEs predicting increases in investment in new machinery/premises in next six months

Future: Employment

SMEs predicting increases in staff in next six months

Q42011/12

Q42011/12

MAS Measuring Trends

38% 41% 48% 50% 51%44%32% 39% 40% 43% 44%41%0%

100%

80%

60%

40%

20%

33% 39%




Special Focus – Mapping Supply Chains

Q: Tell us where your company sits within the supply chain:


Direct to end customer Supplier to final producer Supplier to another manufacturer Raw material processor

46%

26%

22%

6%





Q: What is the most common type of manufactured goods you purchase?


45%

35%

20%

Raw materials

Components

Assembled Goods




Q: Has your company brought any production back to the UK within the past 12 months?

Q: Are you bringing back production?

Q: Has your company moved any production off-shore in the past 12 months?



15% 4%




Q: What were/are the 3 main reasons for moving production?



To reduce cost

To improve quality

To shorten lead times

To improve delivery performance

Investment in internal capabilities (people or equipment)

Internal capacity

Proximity to customer

26%

20%

18%

15%

8%

7%

6%




Q: What difficulties had/have to be overcome before production in UK was/is an option?



Cost: Labour

Cost: Production

Cost: Capital equipment

Product Flow:Availability of skills

Finance: Working capital

Finance: Capital equipment

Finance: Tooling

Product Flow: Identification of capable suppliers

Product Flow: Capacity

24%

19%

10%

9%

9%

5%

5%

5%

4%




The Manufacturer’s Viewpoint

Growth was very high second half 2012. Compared to that, this year is down but taken over a 2 year period we are still growing.

Electroparts Ltd, Sub-contract manufacturer pcbs, cables, wiring looms

The upturn in the economy has led to increasing demand, although this is still sporadic. Plans cannot be made for future resoucre until future is more certain which currently means we cannot always meet demand.

Sign Express

We pride ourselves on manufacturing in the UK, so have never moved production abroad.

David Bradley Engineering Ltd, Engineering & remote control solutions

Growing slightly more optimistic that the worst is over and orders will continue a steady increase.

Contracts Engineering Ltd, Precision engineering manufacturer


Trying to maintain and increase an old industry and lack of skilled labour plus production capacity is proving difficult to overcome.

Saddlery equipment manufacturer

Availability of local premises is a problem as we are likely to grow rapidly through new product introduction.

Surgical equipment manufacturer

Opened a representative office in China, but all of our manufacturing is currently done in UK.

Strip Tinning Ltd, Wired heated windscreens & photovoltaic panel manufacturer




The Economist’s Viewpoint

The UK economy has shown signs of recovery in recent months,

reflecting higher confidence amongst many businesses and some

households. Despite continuing structural weaknesses in capacity

and productivity, and weak incomes and disappointing market shares,

a mood of higher aspiration has emerged.

This better aggregate atmosphere has yet to impact fully on all UK

manufacturers. In the year to August, for example, UK manufacturing

output was flat compared with a year earlier and was still 10% below

the pre-downturn peak (January 2008). Nevertheless, the UK real

GDP data for the third quarter showed manufacturing recording a

second consecutive 0.9% quarterly increase.

Compared with this mixed macro background, respondents to the

latest MAS Barometer survey record a further trend recovery in most

of the key balances. Although a little momentum was lost in the latest

quarter, more than 53% record better order books and 66% expect

sales to increase over the next six months. Over 50% expect to invest

more in new machinery or premises in the year ahead but only 39%

expect to hire more staff.

Given the lack of recovery in productivity since the recession (in

absolute terms compared with previous cycles and in relative terms

compared with our peers) and the ‘hanging on’ to labour we have

seen over the downturn as a whole, this imbalance is to be expected.

Currently, many manufacturers can probably raise output to meet any

likely growth in demand using existing workforces. The recovery’s

main benefit for jobs will come later, when confidence is fully restored

and an upward trajectory in future orders is secure. For now, whilst

the recovery seems real, it is constrained by global debt pressures,

low productivity and weak real incomes.

MAS has invited a senior economist to write an analytical summary of the findings of its Barometer Surveys each quarter.

continued…




Beyond these current factors, the latest MAS Barometer reflects

on positions in the supply chain and sales between sectors.

Interestingly, in the last year, it finds that more companies (15%) are

or have brought production back to the United Kingdom than have

taken output ‘off-shore’ (4%). Moreover, 18% or respondents say

they are planning or considering ‘on-shoring’. The reasons given

by those who are, or are thinking about, moving operations back

reflect cost savings (26%) and quality issues (20%), as well as lead

times (18%) and delivery performance (15%).

Higher domestic costs of labour and production are still the

main constraint on any major shift towards ‘on-shoring’, closely

followed by persistent finance and skills gaps. But, as the former

cost advantages of overseas centres of production are eroded by

productivity-driven improvements in real wages, the competitive

advantages of UK quality and proximity may re-assert themselves.

This is what you would expect as demand and supply pressures

shift in response to emerging economies rapid development (in

both absolute and relative terms).

Although there is much to do and a long way to go, there is some

prospect that the rebalancing of international trade might have

positive, long run, effects on UK manufacturing capacity, capability,

output and sales. As the recovery proceeds, this and other aspects

of ‘rebalancing’ will be key to manufacturing’s ability to grow,

develop and increase its output, market, trade and technological

shares.

Nigel F Jump

Executive Director & Chief Economist

The Economist’s Viewpoint

Nigel Jump of Strategic Economics* has been appointed to provide an independent economist’s view on the results of this survey. The comments expressed above are based on his professional experience and expertise.

*A private economics advisor that offers a range of bespoke analysis on a range of economics subjects to private and public clients, the media and academic institutions.




The previous pages in this report provide a comprehensive overview of the results, views and opinions of over 500 small and medium sized (SME) manufacturers across England.

In this section I am pleased to be able to focus specifically on how over 100 SME manufacturers in the South West responded to the Barometer.

Despite the difficult trading conditions in recent years, many manufacturers in the region continue to perform well. This is highlighted by the number of companies reporting that sales, order books and enquiry levels had all increased during the six months.

These signs of growth highlight the flexibility, adaptability and resilience of South West manufacturers, many of which demonstrate great ambition and are able to react well to changing demands.

Our survey also provides some evidence that expectations of sales growth are slightly more cautious than last quarter. As recent figures show that this country is coming out of recession, we would encourage manufacturers to act now by reviewing their business and product strategies to ensure that they can fully grasp the opportunities presented by the improved economic outlook.

The number of companies planning to recruit more staff has increased slightly since the last quarter. However, if manufacturers are to realise their growth forecasts it is vital that they monitor their recruitment needs to ensure they have enough skilled workers to match potential increase in demand.

It is crucial that our manufacturers are given the support they need to maximise their growth potential. MAS will continue to offer this support by providing access to tailored advice, practical hands-on support and sign-posting to funding opportunities.

We remain as ever committed to helping ambitious companies to overcome challenges, explore new opportunities and grow their business.

Simon HowesMAS Area Director for South West EnglandNovember 2013

Key Results for South West

Simon Howes MAS Area DirectorSouth England

SO

UTH

WES

T




MAS Barometer Outlook Q2

Much Reduced

Reduced No Change

Increased Much Increased

Respondents

Has your sales turnover changed within the past 6 months?

6% 16% 21% 46% 11% 127

Do you expect your sales turnover to change over the next 6 months?

0% 10% 29% 57% 4% 124

How does your order book look compared with 6 months ago?

2% 21% 23% 48% 5% 126

Have your enquiry levels changed compared with 6 months ago?

2% 15% 37% 40% 6% 125

Do you expect staff numbers in your company to change in the next 6 months?

0% 6% 54% 39% 1% 125

Do you expect your investment in new machinery/premises to change in the next 6 months?

2% 4% 45% 42% 8% 127

What impact do you expect the low carbon economy will have on your business?

2% 5% 77% 13% 3% 126

Do you expect your investment in new technology to change in the next 6 months?

0% 0% 58% 39% 3% 127

SO

UTH

WES

T




MAS Measuring TrendsS

OU

TH W

EST Q1

2013/14Q1

2013/14Q1

2012/13Q1

2011/12Q2

2012/13Q2

2011/12Q3

2012/13Q3

2011/12Q4

2012/13Q2

2013/14Q2

2013/14

0%

100%

80%

60%

40%

20%

To Date: Sales

SMEs reporting growth in previous six months

Future: Sales

SMEs predicting growth in next six months

Q42011/12

Q12012/13

Q12011/12

Q22012/13

Q22011/12

Q32012/13

Q32011/12

Q42012/13

Q42011/12

57% 48% 41% 58% 51% 58% 64% 67% 68% 61%55% 63% 51% 51% 53% 51% 52% 54% 53% 57%




MAS Measuring TrendsS

OU

TH W

EST Q12013/14Q12013/14 Q22013/14 Q22013/14

Future: Capital Investment

SMEs predicting increases in investment in new

machinery/premises in next six months

Future: Employment

SMEs predicting increases in staff in next six months

Q12012/13

Q12011/12

Q22012/13

Q22011/12

Q32012/13

Q32011/12

Q42012/13

0%

100%

80%

60%

40%

20%

Q42011/12

Q12012/13

Q12011/12

Q22012/13

Q22011/12

Q32012/13

Q32011/12

Q42012/13

Q42011/12

29% 38% 38% 42% 33% 33% 35% 44% 39% 40% 42% 45% 43% 41% 40% 41% 47% 50% 53% 50%





Q: Tell us where your company sits within the supply chain:


Direct to end customer Supplier to final producer Supplier to another manufacturer Raw material processor

42%

25%

23%

9%

SO

UTH

WES

T





Q: What is the most common type of manufactured goods you purchase?


%

%

35 %

Raw materials

Components

Assembled Goods

49

29

22

SO

UTH

WES

T




Postscript

Manufacturing Advisory Service (MAS)

MAS WORKS for England’s manufacturers. We provide a national service delivered locally by experienced advisors, who help manufacturers to grow their business. A dedicated MAS advisor will work with manufacturers at a strategic level to create business and product strategies. MAS will help to develop a culture of innovation, generating new product ideas and market opportunities. We will work with manufacturers in reducing waste and maximising profitability in their own business and in supply chains. If you’re a small or medium-sized manufacturer in England, many of our services are free and supplemented by appropriate grant funding.

First launched in 2002, MAS continues to play a vital role in assisting thousands of manufacturers in England to share knowledge, improve productivity and achieve sustainable success in an increasingly competitive global economy.

MAS is funded by the Department for Business, Innovation and Skills (BIS).

MAS Barometer

The MAS Barometer is a survey vehicle that provides a snapshot of trends affecting English manufacturing SMEs, as well as an overview of economic conditions and issues faced by the sector.

Barometer Sample

• Manufacturers were chosen across SIC 2007 sectors (10 – 33)

• Targeted at SME manufacturers throughout England

• Larger enterprises and consultants have been filtered from invitations, sample and results

• Results have been rounded up when figures indicate 0.5 or above and rounded down when below 0.5

• Where a non-response is recorded (a missing value) percentages are calculated from the base (number of responses)

• The results of this survey are presented to a confidence level of 95% with a confidence interval of 4




Help and Information

Next Barometer – Your views are important to us:If you are an SME manufacturer based in England and would like to take part in the next quarterly MAS Barometer Survey that takes just five minutes to complete, please email: [email protected] stating that you wish to participate.

Media information:Please contact Russ Cockburn 07812 600271 [email protected]

Further information or support from MAS: Please email [email protected] or follow us at @mas_works

Help and Information

This Survey and Report is designed, analysed and compiled by SWMAS Ltd, [email protected], for and on behalf of MAS. This report is only available electronically in PDF format.

The information and findings in this Barometer may be freely re-used in any online or offline publication and presentation, provided it is accompanied by the following credit line –

“This information was taken from the Manufacturing Advisory Service National Barometer Survey Report.”

Whilst every effort has been made to ensure the accuracy of the information supplied herein, SWMAS Ltd, the Manufacturing Advisory Service (MAS) and any of the contributors to this report cannot be held responsible for any errors or omissions that are revealed by future data revisions, new publications or policy changes, or for the consequences of actions taken by any party on the basis of the content of this report.

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mas measures - steve gerry consulting · latest mas barometer survey record a further trend...

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