Manufacturing Outlook Survey 2012

This poster produced by the British Government in 1939 aimed to raise morale in the event of an invasion. The funny thing is, it seems to me that is exactly what Manufacturers are doing …Keeping Calm and Carrying On…as we continue along the bumpy road of economic recovery.

The latest Manufacturing Outlook Survey produced by EEF and BDO demonstrates the resilience of Manufacturing sector. Agreed, it’s not easy for many businesses right now and all the indicators suggest it will continue to be a tough ride for many over the next 3 to 5 years.

Some economic pundits in the Construction sector are predicting negative growth of – 3 % in 2012 and 2013 largely due to cut backs in public building projects. On the other hand, the Retail sector are more bullish, anticipating an increase in household spending during 2012.

Whatever happens in economic terms, Manufacturing leaders always do just that …Keep Calm and Carry on…

I will never forget some sound advice a close colleague and mentor (Larry Selig) gave me when I was going through a particularly tough patch as Plant Manager; he told me… “Its okay Mark, if you think you are having a good day in Manufacturing, you really don’t know what’s going on!” …how true that is.

But what do you think?

Download the Q1 2012 Manufacturing Outlook Survey published by BDO and EEF

Survey Summary

2012 gets off to stronger start as sentiment rebounds

Demand outlook recovers, but confidence still to translate into investment that will drive growth

Output and orders balances recover from weakening at end of 2011.

– UK demand show notable improvement over the quarter.

– But big differences between sectors remain.

– Investment and recruitment plans have held up

– Sharp turnaround in forward-looking balances point to stronger q2.

– Forecast revised down reflecting contraction at end of 2011

 

EEF Chief Economist, Ms Lee Hopley, said:

“Manufacturing indicators hit a soft patch at the end of last year as events in global markets weighed on confidence and held back orders growth in some sectors.  But our latest survey confirms this was a temporary setback rather than the beginning of a more a worrying trend for both the sector and the economy more widely.

”The confidence shown in our survey again demonstrates the resilience of manufacturing in the face of a changing global outlook.  But while this is feeding through to a continuing willingness to recruit and invest, there is still more that needs to be heard from government to ensure that this investment proceeds and generates much needed growth.”

Tom Lawton, Head of Manufacturing at BDO LLP, said:

“Manufacturers seem to be reassured by strengthening output and forward order books and are looking forward to the next three months with more confidence. The shock from the Eurozone delivered at the end of last year seems to be subsiding and UK domestic demand has caught up with exports – the main driver of growth last quarter – to provide a more secure foundation on which to establish a sustained period of steady, albeit slow, growth.

“Economic indicators are improving and positive automotive industry news this week will help crystallise this optimism. However, the ongoing fragility in UK and European banking systems and economies and the lack of access to capital for SME’s continue to present longer term challenges for the sector. It is important to the overall recovery of manufacturing and the UK economy for the government to recognise the opportunity that improving sentiment in the sector presents and to do everything it can to support and nurture this growth.”

Investment and recruitment still remained positive, with indicators on both improving relative to the previous quarter. A balance of +20% of companies reported taking on new employees, up from 18% last quarter and considerably better than the balance of +5% of manufacturers that had expected to be recruiting three months ago. Investment intentions also picked up with a balance of +18% planning to increase capital expenditure. This was despite some weakening in margins and another quarter of negative cashflow balances.