Report predicts 1 in 44 manufacturers will fail

Driven by slowing domestic and export demand combined with the limited availability of credit, 2.3% of all manufacturing business will be forced to leave the market by the end of 2009, the report says. This is up 52% from the 1,500 failures (one in 68) seen in the sector in 2008. Despite the pessimistic outlook, manufacturing business failures are forecast to taper off in 2010 (although expected to still mirror this year’s 2,300 figure). This is due to expectations of a weaker Sterling boosting exports in the medium term and leading to favourable exchange rates. This in turn will help manufacturing firms more than those in other sectors, benefit increasingly from a global recovery. Kim Stubbs (pictured), business restructuring partner and manufacturing sector specialist at BDO Stoy Hayward LLP said: “The manufacturing industry has undergone a continuous decline over much of the last decade resulting in falling employment in the sector and elevated business failure rates. Sadly, the current economic climate will further accelerate this downward trend and lead to further consolidations in the British manufacturing sector.” “While manufacturers are likely to benefit disproportionately from favourable exchange rates and a global recovery, they need to focus on the crucial steps to get through the economic crisis, including cost cutting wherever possible, managing inventory and retaining cash within the business.”