Manufacturing optimistic but may not cope well

Manufacturers are far more optimistic about growth opportunities than last summer. More than two-thirds now expect business activity and order books to rise during 2004, and 61% also expect to see better profits. Worryingly, however, 28% say they will soon be at full capacity, or that capacity is already unable to meet current or future demand – and that concerns over sustainability of the upturn and/or size limits, skills shortages and a lack of capital are preventing expansion. These are the top level findings of the latest Cap Gemini Ernst & Young and Chartered Institute of Purchasing & Supply (CIPS) business outlook survey. The most commonly cited revenue driver was stronger economic growth, followed by new product development, increased marketing and lower costs – driven down by cheaper imports on materials, as the pound grows stronger. Roy Ayliffe, director of professional practice at CIPS, says: “We are beginning to see the real upturn for manufacturing take hold, and this survey demonstrates that the year ahead should continue in the right direction. The sector now needs to prepare to make sure that issues such as capacity and skills shortages are addressed. John Crampton, vice president CGEY UK, says “If the sector is to capitalise on the opportunities on offer, companies will need to address the issues that are currently limiting their capacity.”