Reasons for manufacturing to stay positive despite hit in orders

Various industry bodies and government statistics have painted a gloomy picture for the manufacturing sector in the last three months. However, here at Bibby Financial Services, we are seeing businesses in this sector continuing to look to grow despite the continued downturn.

In August the Markit/CIPS Manufacturing Purchasing Managers’ Index rose to a four-month high of 49.5, an increase from 45.3 in July. However since the figure is still below the 50 mark that indicates growth, it seems the sector is still shrinking.

A separate survey by manufacturing body EEF showed that the last three months were the toughest conditions for manufacturers since early 2010, with slower demands for goods in both the UK and overseas hitting new orders. Despite these figures, our latest Business Factors Index revealed that a third of firms in the UK remain positive about the future, and have seen increases in performance, especially from the manufacturing sector, by careful implementation of a number of recession-busting tactics.

According to the Index, more than two thirds (67 per cent) of businesses have moved to stave off the threat of the recession by introducing cost and overhead cutting programmes, with more than half (55 per cent) opting to manage debt more rigorously. Meanwhile a quarter, 24 per cent, have chosen to increase their prices in a bid to stay afloat.

The effects of these measures are clearly paying dividends as 38 per cent of firms are experiencing an increase in new customers while 44 per cent have seen lapsed customers returning. This has led to 23 per cent of firms enjoying a rise in customer orders.
There’s no doubt this is a tough time for businesses in the UK. But companies that implement smart, robust commercial strategies, ensure the appropriate funding facilities are in place, demonstrate an ability to adapt to market conditions and remain positive, committed and brave are more likely to not only survive the recession but benefit from the upturn when it comes. 

Posted in Bibby Financial Services updates by Julia Legge on 20 September 2012.

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