Small to medium sized manufacturers in the South West of England must improve productivity by unlocking ‘their own hidden potential’, if sales and profit growth is to meet expectations. This is the key finding of the latest South West Manufacturing Barometer.

The quarterly survey, which is conducted by SWMAS (part of Exelin Group), asked over 126 manufacturing industry leaders based in the South West about their forecasts for business performance. The survey had a special focus on productivity and the extent to which it is engrained in manufacturing business culture.

Three quarters of respondents (75%) said they anticipated an increase in sales in the next six months – the highest figure recorded for the region since Q3 2013 and higher than the national figure of 72%. In a further indication of South West business leaders’ confidence in the sector, 65% of respondents said they were expecting increased profits over the next six months (which contrasts to 59% nationally).

However, as only 46% of the region’s manufacturers actually experienced growth in profits in the second half of 2017, the gap between anticipated sales growth and actual recent increases in profits continues to raise questions about productivity, and the ability of manufacturers to meet their own growth targets.

Encouragingly, 58% of manufacturers indicated in the Barometer survey that they aimed to deliver against their growth targets by investing in machinery and premises; that is a rise of 15% on the last South West Barometer report (Q2).

Furthermore, over half (53%) of respondents to the survey said they planned to recruit new staff. While this figure is 12% higher than in Q2 2017, it may not be quite in step with anticipated sales growth. This suggests that improving productivity through the existing workforce and facilities remains the key focus, as highlighted by SME manufacturers in last quarter’s South West Barometer.

The latest Barometer for the region also explored the extent to which manufacturers have integrated productivity into their business and workplace culture. Around 70% are confident that productivity is engrained at a strategic level, and championed by business leaders. But around 40% of South West manufacturers indicated they would like to achieve better, and sustainable, productivity improvements, pointing to the need to have resource in place, improve engagement with staff, and share learning in order to deliver and sustain change.

Commenting on the findings of this quarter’s Manufacturing Barometer, Simon Howes, CEO of Exelin Group, said: “Confidence levels are riding high in the South West’s manufacturing sector despite market uncertainties, demonstrating the strength and resilience of the region’s SME manufacturers.

“But the latest Barometer demonstrates there is a definite gap between many manufacturers’ expectations about future performance and their ability to deliver the productivity gains required to drive sales and profit growth.

“Our special focus on productivity and culture suggests that while many South West manufacturers have successfully embedded productivity good practice at a strategic level and at a leadership and management level, there remains a stumbling block at actually deliveringlasting productivity improvements. This means manufacturers have to look harder at how they engage their workforce to unlock their own hidden potential – and so achieve their sales and profit ambitions.”

Michael Gibbs, Managing Director of Redruth based spring manufacturer European Springs & Pressings, says:

“These findings speak volumes. To have three quarters of the region’s SMEs forecasting continual growth in their order books alongside increasing profits confirms the wider trend of the UK’s recent rise up the rankings to the eighth largest manufacturer in the world.

“It’s encouraging to see the sector also focus on efficiencies through management and lean manufacturing processes to counter external price rises. We’re now heavily investing in new premises, personnel, machinery and efficiency systems in a determined bid to see today’s manufacturing trend continue.”

The South West Manufacturing Barometer is the largest survey conducted of SME manufacturers in the region and asks senior decision makers for their views on factors influencing business performance and the future of the sector. This survey covers the business operating period for winter 2017 (October, November and December 2017) with businesses surveyed in January 2018. UK SME Manufacturers wanting to add their voice can sign up to contribute to the next Manufacturing Barometer at www.swmas.co.uk/knowledge/manufacturing-barometer

For further information, please visit https://www.swmas.co.uk/knowledge/manufacturing-barometer or follow @swmas_ltd on Twitter. To obtain a copy of the South West Barometer, please email info@swmas.co.uk