Welsh manufacturers remain optimistic despite Brexit uncertainty

Ian Thomas, managing director of Broomfield & Alexander

Welsh manufacturers remain optimistic despite Brexit uncertainty

Manufacturing companies in Wales are some of the most optimistic in the UK for revenue growth over the next 12 months, according to a new survey.

Conducted by Lloyds Bank Commercial Banking and MHA, the survey showed that more than 70% of the Welsh firms are anticipating turnover growth of 5% or more over the next 12 months – 21% points higher than the national average.

This optimism also translated into planned investment in staff, with 71% of respondents in Wales expecting to increase headcount over the next 12 months, compared to 57% nationally.

Of those that are looking to recruit, 35% of Welsh businesses feel confident in finding candidates with the appropriate skills and training; however, 36% reported difficulties in recruiting skilled technicians, which may become an issue when they look to expand their production teams.

In addition to skilled staff, 65% of Welsh respondents intend to take on at least one apprentice or trainee in the coming year, which is ahead of both the previous year for Wales of 59% and the national average of 59%.

Anticipated growth is predicted to be driven by a combination of increased demand from customers, diversification and entry into new markets, both domestically and overseas.

Whilst future trading arrangements post Brexit remain uncertain, the majority of Welsh respondents are not yet focusing on strategies to deal with anticipated impacts, with 50% identifying that they have not yet considered the impact on their business.

Matching the UK-wide position, 88% of the manufacturing companies surveyed in Wales reported investment in research & development (R&D), although just 47% made claims for R&D Tax Credits in the last 12 months (albeit ahead of the national average of 44%).

Despite a widespread perception that many firms in Wales remain dependent on government grants, results show that only 19% of respondents received grant funding via local and national government schemes in the last 12 months – lower than the UK average of 21%.

The picture for Welsh exports was mixed, with Europe and the Eurozone remaining the most popular export destinations for the 60% of respondents that currently ship goods overseas.

Ian Thomas, managing director of Broomfield & Alexander, said: “It is encouraging that the Welsh manufacturing sector continues to be optimistic about prospects for growth, despite the continued uncertainty around Brexit.”

“The findings from this year’s survey suggest that while there are many reasons to be positive, there is more that can be done to support Welsh manufacturers in areas like export market development, access to finance, education and skills.

“Manufacturers themselves also need to take full advantage of opportunities offered by grant support and tax credits for R&D activity.”

Ciaran Leaden, area director for manufacturing in Wales at Lloyds Banking Group, said: “Welsh manufacturers have strong relationships with companies overseas, so it’s encouraging to see that, despite recent uncertainty, they have plans to continue to invest in growth. 

“Education and training also remains a key area of investment for companies across the country. As part of our commitment to helping manufacturing firms prosper, we’ve pledged to support the training of more than 1,000 apprentices, graduates and engineers in the UK.”