Back on the tools

Over half of manufacturers (58 percent) invested more in machinery/machine tools in the last financial year than they did the previous year, according to the latest Annual Manufacturing Report (AMR). Only 5 percent of respondents in the report, which surveys over 100 manufacturers each year and is produced by The Manufacturer magazine in association with Barclays, said they were investing less in machinery/machine tools with the remaining 37 percent at the same level as last year.

The high number of businesses investing in this area, which also includes new production facilities, further underlines the growing confidence we’re currently seeing in the manufacturing sector. Over two-fifths (42 percent) of manufacturers are investing more in new product development than they were 12 months ago, with another 42 percent investing the same and only 5 percent investing less than at the same time last year.

With optimism returning to the sector, access to working capital has become an increasing focus for manufacturers over the past 12 months. This year’s results show the largest emphasis on increasing cashflow out of all of the last five years of this report. Over half (53 percent) of manufacturers’ primary financial objective over the year has been to increase cash flow.

Another report high is seen in the percentage of manufacturers organising capital investments strategically as opposed to replacement. This year has produced the most positive response to this question since the survey began in 2008 with all respondents seeing at least one quarter of their investments as strategic. This increase underlines the rising confidence in investing in longer-term assets as well as further reflecting the uptick in machine tool expenditure already highlighted in this release.

Looking forward, the AMR reports that the positive improvement in appetite to invest will continue over next year with over two-thirds of respondents looking to increase their expenditure on capital goods. Almost nine in ten businesses (88 percent) surveyed intend to invest either the same or more in new product development in 2014, rising to 90 percent when looking ahead for the next five years.

Encouragingly, the report indicates that many manufacturers are now looking to take advantage of the global market place. Over the past year, there has been a marked increase in the number of manufacturers carrying out offshore activity with almost a third of respondents (32 percent) conducting over 40 percent of their business offshore (2012: 19 percent) while just over one-fifth (22 percent) carry out between 10 and 30 percent of their business offshore.