Manufacturers gear up for new machines spend, survey finds
After years of holding tightly on to the purse strings, manufacturers are getting ready to embark on a spending spree, according to new research from Barclays.
The bank said more than half of companies will be upping their investment spend over the next 12 months, despite still finding economic conditions challenging.
It also found more than two thirds of companies have been increasing their investment over the last five years and only 20% expect to cut future investment.
Graeme MacLaughlin, relationship director at Barclays in Northern Ireland, said the survey shows long-term vision.
He explained: "Whilst it's a tough environment today for UK manufacturers, the survey results show they are in this for the long-run, committed to increased investment to make sure they are in the best possible shape when we come out of recession, and showing that there is confidence in long-term profitability."
Northern Ireland's engineering companies will also be pleased to hear that most of the expected investment will be spent on new machinery and machine tools.
Nearly two thirds of companies questioned said that's where they plan to invest, as well as in new product development and upgrading factory fixtures and fittings.
Only 30% will be using the money to break into new markets.
At present, just 45% of firms export, only 3% of which have started exporting in the last three years.
Mr McLaughlin added: "Whilst businesses are ring-fencing cash for new machinery and upgrading factory fittings which are familiar areas that offer secure returns, there's less appetite for more speculative attempts to grow exports in a far flung market, even with the lure of higher returns.
"Manufacturers appear to still have some reservations about investing in new faster-growing markets to try to increase sales.
"Instead they are still focused on the quick wins that cost-cutting can bring to the bottom line."
When it comes to export markets, well-established trading alliances continue to be the UK manufacturing sector's favoured foreign customers, with the USA and Germany identified as the best export markets for both sales growth and value.
However, the BRIC-led export growth has yet to materalise – almost a third of companies don't sell a single thing in Brazil, Russia, India or China.