NI Manufacturers continue to show resilience

The latest Manufacturing NI and Tughans “The State of Northern Ireland Manufacturing 2019” manufacturing survey reveals a sector demonstrating continued resilience and growth in a context of political uncertainty, skills shortages and rising costs.

 

The survey, which was conducted in May/June 2019 for Manufacturing NI and legal firm Tughans, showed that 76% of respondents (up from 67% in December 2018) consider the uncertainty of Brexit to be the biggest issue currently affecting business with local political uncertainty coming a close second.

 

Against this background, 67% of those surveyed described their business as being in a position of growth whilst 47% said they expected that growth to continue in the next 12 months.  Significantly, 87% described their companies as having realised profits in the last year.

 

47% of firms reported an increase in staffing levels but this compared to 57% in December 2018.  Accessing appropriate skills was the most challenging barrier to recruitment with 78% of companies finding it difficult to recruit staff in the last 12 months.  As an aid to recruitment and retention, 71% of firms have increased the levels of basic pay while a third of the companies surveyed have improved non-financial benefits such as holiday entitlement, hours of work and health insurance.

 

Brexit continues to be a major issue with 60% of respondents believing it will have a negative impact on business.  Whilst 61% of firms say that they are carrying on with business as usual in the context of the ongoing Brexit delay, 45% have actively stockpiled in anticipation of supply disruption.  This compares to 16% in December 2018.  41% have stocked parts or raw materials to last more than three months.

 

The rising costs of doing business continue to be challenging with 75% experiencing increased energy costs; 94% reporting increased labour costs and 81% accounting rises in transportation expenses.

 

Looking ahead, manufacturers are planning ongoing investment with 65% intending to spend on R&D or product development; 63% to increase spend on sales and marketing and 59% focusing on upgrading or introducing new facilities or machinery.

 

Stephen Kelly, Chief Executive, Manufacturing NI, says, “This is our 3rd survey alongside Tughans and we are now clearly seeing trends develop.  Of concern is that confidence is declining due to political uncertainty, particularly in regard to the UK’s exit from the EU.”

 

“For the first time, the degree of stockpiling by manufacturers has been revealed with almost half of firms saying they’ve invested significant sums of working capital in an effort to insulate them from the potential crash out in March 2019.  With the next deadline of 31 October, at a time when storage is already under stress as retailers stock up for Christmas, we will have significant challenges to try to continue business as usual.  Indeed, now 60% of firms believe Brexit will have a negative impact on their business up from 41% this time last year.”

 

“The costs of doing business are rising significantly too with three quarters of firms feeling the impact of rising energy cost and 4 out of 5 seeing transportation costs rising.”

 

“Whilst the rate of job expansion has slowed sharply, it is positive that half of firms, despite the difficulties in recruiting, continue to add to their workforce and that more is being done to attract and retain staff including training and development and a big increase in wages.”

 

“Manufacturers are creative, brave and resilient.  They find a way to resolve problems but it is now clear that issues outside of their control are beginning to bite.  We need leadership in Stormont and at Westminster who will take the right decisions in the coming months to protect them and the jobs which rely on their businesses.”

 

James Donnelly, Head of Corporate, Tughans, adds, “Although not quite so positive as the December 2018 survey, the survey findings indicate that most manufacturing businesses locally are remaining viable and optimistic.  This is encouraging despite the ongoing challenges presented by political uncertainty, the rising cost of doing business and the shortage of appropriate skills.  Whilst the sector has embraced a stoical approach of just getting on with it, there is no doubt that if our local politicians would also just get on with their jobs, that the local economy would benefit hugely.”

 

The Manufacturing NI and Tughans manufacturing survey was carried out in May/June 2019 by Perceptive Insight.  Respondents represented companies from across Northern Ireland including those employing over 1000 with the majority, 28%, in the 10-49 bracket.  The top three manufacturing sectors who completed the survey were machinery and equipment; other manufacturing and repair; wood, paper products and printing. Download the full report The State of Northern Ireland Manufacturing 2019

 

NI Manufacturers continue to show resilience
News

June 20, 2019

1:44 pm