North West manufacturers optimistic despite scaling back investment plans, survey finds
North West manufacturers are more optimistic than their regional counterparts about business returning to pre-Covid levels within the next 12-months, according to survey by MHA Moore and Smalley.
Some 86% of respondents in the North West envisage a return to normal trading levels compared with 36% nationally, according to the bi-annual survey.
However, 45% are planning to spend significantly less in the next 12-months than previously anticipated. Meanwhile, 77% believe the increased paperwork required due to Brexit has hindered their business.
Ginni Cooper, head of the manufacturing sector team at MHA Moore and Smalley, said: “These results show optimism is prevalent amongst our North West based manufacturers, with improved domestic demand predicted as we continue emerging from lockdown restrictions.
“While many in the North West region have been under some form of restriction since October 2020, most of our manufacturers were able to continue trading, adapting their processes as appropriate.
“Whilst the recent introduction of the super deduction tax break may stimulate investment plans, business owners are concentrating on current working capital, which will be vital to meet expected increases in demand.
“In addition, where businesses have taken advantage of incentives such as tax deferrals and government backed loans, repayment profiles now need to be considered as part of the short rather than long term plan. This may account for a significant proportion of respondents saying they will spend significantly less on new investment over the next 12-months.”
The survey, conducted by firms within the MHA accountancy network, surveys manufacturing and engineering businesses in the North West, North East, Midlands and South of the UK.
In terms of government support, the majority of North West manufacturers felt that enough had been done to support them, with praise bestowed on the flexibility of the furlough scheme. Just under a quarter felt the government could have done more, in particular where struggles with imports and exports impacted the business and the lines between pandemic and Brexit effect were blurred.
UK-wide, the survey found that 61% of manufacturing and engineering businesses have changed their practices as a result of Brexit and 75% are planning to invest less or the same as planned before the Covid-19 pandemic hit, although this is a drop from 81% September 2020.
Social distancing has affected production capacity by ‘quite a lot’ for 18% of businesses, an increase from 9% six months ago. 45% reported ‘no’ changing of their supply chains; down from 65% in September 2020 46% felt Government had done ‘enough’ to support them during the pandemic.