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Clients Demand That Small Firms Invest

Small manufacturers plan to spend £20.2billion to replace outdated machinery and to hire more staff over the coming year. This should help assist with unrealistic demands that customers push onto these firms.

Research undertaken by the Manufacturing Advisory Service (MAS) which is run by the government discovered that optimism regarding increased sales was being strengthened by a tightening of margins and not being able to meet clients lead times.

700 companies were surveyed by MAS and 48% said that they plan to make investments on new premises and new machinery.  39% want to develop or buy new technology.

These figures show an improvement on the figures produced last year. More manufacturers will be looking to hire new staff and see a rise in sales.

This being said, 52% of the companies said that because of the poor profit margins quoted it meant having to turn work away from potential clients.

The Area Director of MAS for North and West, Lorraine Holmes explained that there was more of a hunger for SMEs to remain competitive and this requires investment which in turn will lead to the creation of new jobs to meet the demand.

New machinery and technology should help get over the barriers that are stopping these firms from meeting design specification and deadlines.

MAS gives advice on how small companies can improve their efficiency and success in identifying new commercial opportunities. Since last year MAS has helped over 9000 small manufacturing businesses.

Other research has found that firms had been holding off on investing on new machinery until they really needed to, i.e. because of deteriorating equipment instead of actually wanting to be more productive.

The financial part of General Electric which is GE Capital said that SME manufacturers want to spend just over £20billion over the next year, this is up 38% compared to 2012’s third quarter.

There is definitely a “degree of positivity” according to Ilaria del Beato who is the Chief Executive of GE Capital UK. Replacement rather than growth is key.

Small businesses in the UK are growing at a slower rate than those small businesses in Germany and Italy says GE Capital. SME’s in all sectors will be spending a combined amount of more than £51billion and will be creating more than 500,000 jobs

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