English SMEs set to invest in capital equipment

The latest Manufacturing Advisory Service (MAS) Barometer's special focus revealed that 86% of respondents were planning to invest in capital equipment over the next twelve months, with companies looking to spend £121,000 on average. With over 80,000* firms making up the English SME manufacturing community, this could equate to hundreds of £millions of fresh industry investment between now and 2015. Two thirds of the firms questioned are looking to purchase new plant and machinery, just over half are focused on upgrading IT/communications infrastructure and nearly a third on improving premises. The main reasons driving these investment plans were boosting efficiency and quality (31%), followed by developing new products/processes (30%) and extending existing capacity (22%). Fewer than one in five companies (19%) said they planned to approach banks to fund capital equipment purchases in the next year, with manufacturers instead choosing to secure money via grants (27%) and the Regional Growth Fund (21%). A record 864 SME manufacturers responded to the latest MAS Barometer, which provides an overview of economic conditions and issues faced by the sector during October to December 2013. 62% of companies reported an increase in sales over the last six months (a 6% rise on the last report), whilst over three quarters of businesses (76%) expect to boost sales between now and June 2014. Steven Barr, Head of MAS, said: "Investment is crucial if we are going to take advantage of reshoring and predicted growth in markets such as offshore wind, renewables and low carbon vehicles... "The fact that more companies are applying for grants and the Regional Growth Fund means awareness of available support is rising and I'm encouraged that some firms are also using their own in-house funds (11%). This suggests manufacturers have been prudent through the recession and are trying to be more self-reliant when it comes to financing expansion."