By Daniel Hunter

English manufacturing small to medium-sized firms (SMEs) appear determined to meet the industry call for greater investment according to the latest Manufacturing Advisory Service (MAS) Barometer.

Half (50%) of the 682 companies questioned expect to spend more on new machinery and premises over the next six months, a clear 12% rise on the same period last year.

There appears to be a similar appetite for embracing new technologies with 40% of firms indicating they will fund more activity in this area.

In further positive news for the sector, 53% of SME manufacturers reported an increase in sales in the first half of the year, with an all time National Barometer high of 67% predicting further growth over the next six months.

“Manufacturers tend to be very cautious and traditionally would have needed significant confidence in the long-term future to relax the purse strings," David Caddle, Area Director for the Manufacturing Advisory Service, commented.

“Encouragingly, the latest Barometer provides the clearest indication yet that companies are prepared to invest in new machinery and their premises in a bid to remain competitive and take advantage of significant opportunities both at home and abroad.

“It is a reassuring finding and appears to meet the EEF’s recent call for the sector to fund more research, innovation and export growth.

“This sense of optimism is also present when it comes to employing new staff. 43% of SMEs (up 3% on the last report) are planning to hire new people with a further 50% expecting to keep workforce levels the same.“

Business and Energy Minister Michael Fallon said: “These findings are the latest indication that the economy is starting to head in the right direction, as we move from rescue to recovery. It is particularly encouraging to see that confidence is returning and manufacturers are becoming more optimistic about their future growth."

The second MAS Barometer of 2013 collected responses from 682 manufacturing SMEs across England, providing an overview of economic conditions and issues faced by the sector from April to June this year.

The regular quarterly special focus concentrated on finding out whether business growth could be linked to innovation.

82% of respondents reported that new products introduced over the last two years had led to new sales, with more than half (55%) reporting an increase in both sales and profits. Over a third (36%) of respondents told us that new sales accounted for 25% or more of their total turnover.

The Barometer also revealed the diverse requirements of the automotive, defence and food and drink sector are being fulfilled by the majority of respondents. Marine, aerospace and oil and gas are also generating strong demand.

David picked up the story: “The results in this special focus indicates that there is a strong link between innovation and increases in both company growth and profitability.

“This is why being innovative has never been so important for manufacturers. We are helping to encourage innovation in SMEs through our New Product Development programme, which provides support in developing, validating and bringing new ideas to market.”

MAS, which is funded by the Department for Business, Innovation and Skills (BIS), works for manufacturers and through experienced advisors can help shape strategy, create new products, reduce waste and review supply chains.

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