SME manufacturers the rainmakers for UK plc, WM Manufacturing Summit hears

Factories not finance houses are Britain's best hope for evading debt, an audience of government chiefs and leading industrialists at the Institution of Mechanical Engineers heard. Convincing more manufacturers to sell goods abroad was pivotal to a Downing Street campaign to get another 100,000 UK businesses exporting, Lord Green, minister for trade and investment told the summit. He said: "If we assumed over time as they got into their stride those new companies were as successful as those currently exporting we would more of less close the trade deficit... the prize is there." The UK had to break a habit of simply servicing its historic trade deficit, Green added. "The last time the current account in this country was in surplus in this country was 1984...its deteriorated decade by decade. So far we've had no trouble financing that.. I think it would be folly to assume we could always finance the trade deficit particularly one that is growing." However, Westminster had to ramp up financial aid for SMEs to help realise the export growth according to manufacturing experts. Sir Alan Rudge, chairman of the ERA Foundation. "You've got to get some money flow through the system. Why doesn't it work? If you look at the last 30 years then clearly we're not getting it right. I think there's distrust between a lot of SMEs and the banks. We need a banking system in place that focuses on encouraging exports." Rudge also called for tax breaks for smaller companies to encourage investment. He said: "One of the things is to allow SMEs to put capital investment against tax. That would make a huge difference to their decision come the year end on whether they invest in new equipment." The comments came as the UK Manufacturing Summit heard how businesses are turning down contracts worth almost £2.3bn a year due to reluctance to invest in new capital equipment. Research by Lombard, asset finance provider of The Royal Bank of Scotland Group, claimed 40% of businesses have said no to new orders as they do not want to invest in the current economic climate. The low levels of investment mean that the UK now lags behind countries such as Austria, Switzerland, Turkey and Mexico in the use of machine tools, a key indicator of manufacturing investment according to the study. Max Gosney, Works Management editor, urged SMEs to seek out investment aid through agencies like UKTI and UK Export Finance in order to meet the export challenge. Growing manufacturing exports was a matter of national interest, he said. "World trade is expected to reach £54 trillion by 2030. So with our trade deficit currently at £8.6billion it stands to reason that if more manufacturers, particularly SMEs, can get exporting than we have a terrific chance to convert that deficit into a surplus in years to come."