Dave Atkinson, UK head of manufacturing at Lloyds Bank
Manufacturers in the Midlands have every reason to be optimistic about the year ahead, says Dave Atkinson, UK head of manufacturing at Lloyds Bank. He tells Bryce Wilcock why now is as good a time as ever to go for growth.
Growth hungry manufacturers in the West Midlands should take note of Dave Atkinson’s name. As Lloyds Bank’s UK head of manufacturing he has helped facilitate in excess of £4bn worth of financial support to British manufacturers over the past four years. And as the UK looks forward to post-Brexit Britain, there has never been a better time for manufacturers to go for growth. The falling value of the pound has proved a major boon for exporters, in turn, order books are swelling.
“We’ve seen a buoyant trend and mood over the past few months across the manufacturing sector,” Atkinson says. “We’ve seen order books grow as optimism continues to rise and we’re seeing businesses who would have never thought about exporting now capitalising on overseas opportunities due to the weakening of the pound.
“We’ve also seen confidence rise after the UK’s decision to leave the European Union (EU), which initially created mass uncertainty amongst all sectors. However, having worked with manufacturers for 30 years now, the one thing I’ve noticed is their amazing agility when faced with uncertainty.
“Regardless of where the uncertainty originates from, they knuckle down, and they find a way to deal with it. Uncertainty is a big part of a small or medium-sezed enterprise’s (SMEs) growth. It’s a challenging world out there and they are faced with challenges every day of the week.
“I think they’ve just knuckled down and said, ‘you know what, we recognise there’s an opportunity here, we recognise there’s an opportunity if we invest and we recognise there’s an opportunity to create new jobs.’
“The sector has done that really well and a third of manufacturing firms who participated in our latest Business in Britain report said they were looking to step up investment this year and around a quarter were looking to create jobs.”
But, whilst Atkinson and his team are enthused about the growth potential following Britain’s decision to withdraw from the EU, he is also acutely aware of the challenges that manufacturers face. He says: “Whenever there is a movement in currency markets there are winners and losers. For those who are importers of their raw materials, they’ll face the challenges of increasing costs. Another challenge is the ongoing uncertainty surrounding the decision to leave the EU, which will naturally impact some more than others.”
However, as head of manufacturing, Atkinson’s remit isn’t just to help provide financial support to manufacturers, but to build relationships and work with industry bodies to help drive growth across the sector. A great example of this is the Advanced Manufacturing Training Centre (AMTC) in Coventry, which has been designed to help plug the skills gap by providing premium training for the next generation of engineers and technicians in the Midlands.
Joining the Department for Business, Energy & Industrial Strategy, Lloyds Bank is the largest private sector contributor to the centre and is contributing £5m over a five-year period as part of its commitment to support the UK manufacturing industry and to help tackle the sector’s shortfall in skills.
As Atkinson explains: “While the sector has indicated a determination to create more jobs this year, there is still a national skills challenge. We’ve recognised that and it was one of the big prompts for us as a business to invest £5m to support 1,000 apprentices, graduates and engineers through the AMTC.”
The bank is also investing in helping businesses make more of their working capital having published its latest working capital index, a unique barometer of working capital pressures on British businesses.
Although the index doesn’t specifically delve into how each individual sector is affected, Atkinson was keen to reiterate the benefits of manufacturers exploring practical ways they could make a difference to the way they manage working capital.
“The index shows there is £535bn of additional cash tied up in working capital across British businesses,” he adds. “What has caused that? The fall of the pound was one of the key reasons as many businesses imported raw materials in bulk to save themselves from paying more in the future and have stockpiled materials in turn.
“Secondly, you naturally get a draw of cash into working capital when you go through a growth phase, which the wider sector has enjoyed over the past seven or eight months, leading to growing order books. One in four businesses also stated they’re experiencing longer times to pay, in other words the people paying them are taking longer to pay up. Add all of that together and there is £535bn of additional cash tied up in inventory, extended payment terms and red tape. All of the things that affect a business’ cash flow.”
Lloyds Bank made a commitment to provide £4bn worth of new lending to the manufacturing sector over the four years to the end of 2017. By the end of June last year, six months early, the bank had delivered that goal. Now, as the bank drafts up its investment plans for the next four years, Atkinson believes manufacturers in the Midlands in particular have a great opportunity to realise their growth potential.
“If you look at the broader picture, the Midlands epitomises the manufacturing sector,” he says. “It supports highly-skilled jobs and contributes massively to UK exports. In fact, almost half of all UK’s exports come from manufacturing businesses.
“That’s why we invest in the sector and our overarching ambition is about helping Britain prosper, which is why we have a strategy built around that and the businesses and the people in the communities in which we work.
“That’s why we’re investing in skills through the AMTC, investing £4bn into manufacturing and have dedicated teams who have been trained through University of Warwick to help businesses grow. We want to be the bank of choice for manufacturers and there are lots of ways through both our financial and non-financial solutions we can help manufacturers.
“So, if you’re a manufacturer and are thinking of scaling up your operations, connecting with industry, or simply want support, be it financial or not, come and talk to us, we’re always looking to support manufacturers and help them grow.”
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