Brexit clarity lifts gloom for South West manufacturers with sales and profits expected to bounce back

February 25, 2020

Confidence among the South West’s small and medium-sized manufacturers has bounced back following the breaking of the Brexit impasse, according to a new survey.

While the sector ended 2019 by enduring its toughest quarter in a decade – with the worst reduction in sales, profits and staff numbers since the depth of the recession – it is now enjoying a marked turnaround. 

The latest quarterly South West Manufacturing Barometer, published by manufacturing sector support group SWMAS, highlights an uplift in confidence following the UK’s exit from the EU at the end of January.

Some 42% of manufacturers are now more confident about their prospects than this time last year, with 24% feeling broadly the same and 34% less confident.

The latest Barometer also found that:

  • Some 55% of manufacturers expect sales to increase over the next half-year – up 15 percentage points on the previous quarter and the same as a year ago
  • Almost half (49%) forecast profits to increase in the next six months – up 17 percentage points on the last Barometer and a 4% increase on the previous year
  • The percentage of businesses expecting investment in plant and machinery to increase in the next six months is up 13 percentage points in a year – from 41% to 54%
  • However, despite the surge in confidence, only 32% of manufacturers in the region have recorded an increase in sales in the past six months – a substantial drop from the preceding quarter and down from a figure of 51% a year ago
  • Recruitment expectations are broadly flat compared to a year ago – but up 10 percentage points to 43% in the last quarter in terms of the number of firms expecting to increase headcount.

SWMAS MD Simon Howes, pictured, said the results reflected a feeling that “the foot is coming off the brake” as a clearer picture begins to emerge around Brexit. 

“The forecasts for the first six months of 2020 are starting to look much more positive,” he said.

“We are not yet at the end of the road regarding Brexit but it seems that we have at least decided which road we are going to take, so our manufacturers can begin the journey.

“Political certainty appears to have improved clarity, resulting in a partial return to confidence in future sales and profits. This, in turn, should lead to more confidence in investing and recruiting.”

This quarter the Barometer focused on the underlying confidence of SME manufacturers to gauge how they were feeling as they plan for 2020 and beyond.

The results show there is still a good deal of uncertainty, with some still feeling downbeat regarding their prospects for the future.

“However, it is encouraging to note that many senior people in manufacturing are now feeling more confident,” added Mr Howes.

“The general clamping down on investment and recruitment decisions is finally easing.

“Customers are now coming forward with plans which were previously on hold, but we know too that some sectors are finding it tougher than others.

“We will be working with our manufacturing clients across the region to take a closer look at these differences and to understand the lessons that can be learned going forward in terms of people, products and processes.”

The quarterly South West Manufacturing Barometer seeks the views of the sector’s senior decision makers on their aspirations, plans and fears, as well as gauging their overall business performance over the last six months.

It forms part of the UK’s largest and widest-ranging survey of the SME manufacturing sector and is conducted by SWMAS, part of the business improvement and people development consultancy Exelin Group.

The South West’s manufacturing represents 11% of the region’s economy – slightly higher than the national average of 10% – with more than 12,000 companies employing around 247,000 people between them.


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