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Manufacturers reveal renewed appetite for growth

18 August 2011

UK manufacturing companies are showing renewed confidence about their long-term growth prospects in spite of the current economic climate

Directors of companies with annual revenues of up to £20million are expecting, on average, to increase their turnover by 138% in the next five years, according to research from Santander Corporate Banking.

The research identified manufacturers as most optimistic about their company’s future prospects. Financial services (108%), wholesalers (85%) and construction businesses (74%) follow, while retailers remain relatively cautious expecting to grow by 52% over the period.

More than one in ten (12%) manufacturing directors say their business has never been in better shape and more than a third of company directors highlighted the active pursuit of growth as an immediate short-term business priority (36%). Retaining existing staff (21%), attracting investment (20%) and R&D (19%) also came high on the list of current priorities.

Yet despite the general optimism, manufacturing companies still said the tough trading environment represented the biggest challenge, cited by almost two-thirds (63%) of directors as the main reason preventing them from growing.

Steve Pateman, Head of Santander Corporate and Business Banking, said: “Many businesses clearly remain cautious in the current tough trading environment but it’s encouraging to see that in the longer-term the manufacturing sector in general is very positive about its future prospects.

“The country is reliant on these businesses to drive the economic recovery and it bodes well that they are confident in their growth potential. At Santander, we are committed to supporting ambitious companies break through the challenges and barriers they face, helping them to fulfil their growth ambitions.”

SectorAverage expected company growth over next five years
Financial/property/business services108%
UK total104%
Source: BDRC Continental

Other Findings
Smaller companies are, not surprisingly, most optimistic about their growth prospects with the average company with a turnover of less than £500,000 expecting to grow their business three-fold (by 202%) over the next five years.  However, larger companies also have ambitious expansion plans, with businesses turning over between £5million and £20million expecting to grow by an average of 86%.

Businesses in Scotland and Northern Ireland are most optimistic about their growth prospects over the next five years, expecting to grow by 194% on average.

Businesses in the South East (136%) and South Wales and the South West (123%) also show strong levels of optimism. However, businesses in the North West, West Midlands and North Wales are less optimistic, expecting to grow by around 50% over the same period.

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