Tughans Solicitors

NI Manufacturers Remain Positive

The latest Manufacturing NI and Tughans “The State of Northern Ireland Manufacturing 2018” manufacturing survey reveals a sector demonstrating positive growth, sustained profits and increased staffing levels.

 

The survey, which was conducted in December 2018 for Manufacturing NI and Tughans, shows that 67% of respondents (up from 56% in May 2018) consider the uncertainty of Brexit to be the biggest issue currently affecting business, out polling other issues such as the cost of doing business and local political uncertainty.

 

 

Against this background, 80% of those surveyed described their business as being in a position of growth whilst 57% said they expected that growth to continue in the next 12 months.

 

57% of firms reported an increase in staffing levels, compared to 45% in May 2018, with 62% planning to take on more workers in the next year.

 

As Brexit looms, 50% of respondents believe that it will have a negative impact on business.  Preparations for are in evidence with 33% having conducted a Brexit risk assessment, 30% having put in contingency plans in place and 16% already stockpiling in anticipation of supply disruption.  Another 42% plan to stockpile to ensure continuity of supply.

 

Other barriers to growth include problems recruiting the appropriate skills to meet orders, bureaucracy and government policy areas.

 

Looking to the next 12 months, manufacturers are planning ongoing investment with 72% intending to increase spend on sales and marketing; 71% aiming to upgrade or introduce new facilities and machinery and 61% focusing on R&D or product development.

 

Stephen Kelly, Chief Executive, Manufacturing NI, says, “by nature, business will be positive, seek opportunity and plan for the future.  The survey demonstrates this continues to be the case despite some dark economic clouds on the horizon.  Firms want a business environment which allows them to succeed, to be agile and take action on areas which allow them to create more wealth and work.  Sadly, in the face of spiralling input costs, particularly energy, recruitment difficulties and 2 years after the collapse of the NI Executive and the increasing prospects of a No Deal Brexit, firms are escalating plans to make investments elsewhere or plough cash into investments which protect rather than grow their businesses.

 

It is startling that whilst the vast majority of firms recruited in the past year that 4 out of 5 of them struggled to get the skills they require for their business.  This comes at a time when migrant labour is leaving, when a new migration policy restricts the ability to recruit and firms are being taxed for Apprenticeships without the right to invest this money into developing their own people.

 

A year ago 21% of businesses could see Brexit as being a success.  This has now sunk to only 6%.  Very few are convinced of any of the arguments put forward, particularly those promoting a No Deal exit.  Indeed, half of firms say that Brexit is already having a negative impact on their business and two thirds are say that it is a barrier to growth.  These are people who understand the practicalities of trading in markets at home and abroad.   Those who want Brexit to be a success need to start listening to these businesses or face the prospect of job losses in the mouth of May’s Council elections.”

 

James Donnelly, Corporate Partner, Tughans, adds, “The generally positive mood revealed in the survey is encouraging despite the many real and potential challenges the sector is facing.

 

With the majority of surveyed businesses (89%) actively recruiting, it remains a concern that 81% have found difficulty in recruiting the skills required and that 21% are turning down potential business opportunities as a result.  Whilst the sector is doing its best to mitigate against the skills deficit, there is no doubt that a restoration of local government would be of great benefit to address this.”

 

The Manufacturing NI and Tughans manufacturing survey was carried out in December 2018 by Perceptive Insight.  Respondents represented companies from across Northern Ireland including those employing up to 1000 with the majority in the 10-49 bracket.  The top three manufacturing sectors who completed the survey were machinery and equipment; wood, paper products and printing; other manufacturing and repair.

Download the full survey report or read the key headline findings:

(figures in brackets from May 2018 survey)

 

Performance and Trade

  • 74% (57%) saw increased sales in last 12 months
  • 57% (45%) have boosted their workforce
  • 57% (55%) expect level of growth to increase in 2019
  • 80% (72%) describe their business as being in a position of growth
  • 89% (81%) say their business has been profitable

 

Barriers to Growth

  • Impact/uncertainty of Brexit, 67% (56%)
  • Cost of doing business, 65% (60%)
  • Political uncertainty, 59% (51%)
  • Recruiting skills, 57% (47%)

 

Investment

  • 72% plan to increase sales and marketing (63%)
  • 71% plan to upgrade/introduce new facilities/machinery (66%)
  • 61% plan to spend on R&D or product development (54%)
  • 60% have applied for R&D tax credits
  • 65% are trying to be more resourceful with current facilities and working capital

 

Brexit

  • Only 6% of firms believe Brexit will have a positive impact on their business
  • 50% report a negative impact on business now (up from 41%)
  • 33% have conducted a Brexit risk assessment
  • 30% have put contingency plans in place
  • 16% have stockpiled supplies

 

People

  • In the last year 89% have recruited new staff (83%)
  • 81% experienced difficulty in recruiting appropriately skilled staff
  • 77% delivered wage increases between 2-5% (68%)