Manufacturing SMEs positive about growth prospects

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UK manufacturing is one of the most confident sectors, with 82% of CEOs from industrial SMEs predicting strong growth in the coming year – though ongoing problems accessing finance mean that almost all plan to fund growth internally through improved cashflow. That's the key finding of research published today (12 September) by private equity firm ECI Partners.

The research shows 82% of manufacturing businesses expect to see turnover growth of more than 6% over the next year, while a quarter are predicting a rise of more than 20%. Prospects for job creation are equally strong, with 79% of manufacturers expecting to add to their head count, and 24% forecasting growth in employee numbers of more than 6%. "It's good news that despite a tough few months, nearly three quarters of the SMEs surveyed by ECI are looking to recruit over the next year and half expect to see substantial profit growth in that period. Up and down the country, it is Britain's SMEs that are driving our economic recovery," said business minister Mark Prisk (pictured). Two thirds of manufacturing bosses think it will be difficult or very difficult to raise finance in the year ahead, compared with 60% overall (2010: 58%). And 38% consider the lack of finance available as the main barrier to raising finance in the year ahead. Therefore it is no surprise that 96% of all companies surveyed will source all or part of their growth finance from their own cash flows. This is ECI's second annual Growth Survey, which questioned 250 UK CEOs about their expectations, aspirations and growth strategies for the year ahead. Respondents came from businesses with turnover between £10m and £200m that had grown sales by 1% or more the previous year. Ken Lindsay, director of ECI Partners and head of its manufacturing team, commented: "The positive outlook of CEOs of manufacturing companies matches our own experience of the sector. The sector is helping to lead the UK out of recession and we are actively looking to help CEOs in the sector maximise the potential of their growth companies." ECI says it is one of the last remaining private equity firms still to have a dedicated manufacturing team. Selected current and past investments include Stewart Plastics, Kelvin Hughes, Racal Acoustics, AKW Medicare, Premier Bathrooms, Nuaire and Williams Holdings (where Sir Nigel Rudd and Brian McGowan made their names).