By Max Clarke

A new survey of high tech manufacturers highlights a UK business sector that is forging ahead and strongly confident about prospects in 2011. However, the 400 senior executives polled by GE for the High Tech Manufacturing Index also expressed concerns on other issues such as access to capital and rising raw material costs.

Mark Elborne, President and CEO of GE in the UK, commented:

“Our analysis of the UK’s advanced manufacturing sector is one of the first ever surveys of its kind and reinforces its importance to the UK’s future growth potential. It shows a vibrant and positive sector that can help revitalise the UK economy over the next few years. Many of those surveyed had a positive 2010 and feel confident about 2011, particularly when discussing the potential in export markets.”

Data from the survey- to be released in full later this month- show the following findings:


THE ECONOMY/ BUSINESS:

The senior executives interviewed for the first GE High Tech Manufacturing Index were far more likely to say that the current position of their business is positive (75%) rather than negative (7%) and this ‘net optimism’ score of +68 remains high when looking ahead for the next 12 months (+66).

In contrast to many other UK businesses, 61% have seen some level of growth in 2010 with over a quarter (27%) enjoying growth of 11% or more.

When looking at their own businesses and sector, those questioned said they felt that ‘high tech manufacturing’ companies as a whole had ‘outperformed’ the wider economy and would continue to do so. Compared to Q4 2009, 60% of the high tech manufacturers surveyed felt prospects for their business had improved a great deal or to some extent, while only 33% felt the situation had improved for the UK economy as a whole.

When asked about prospects for the next 12 months, 71% of those polled said they expected the performance of their own business to be either a little better (44%) or a lot better (27%), with 44% saying they felt that conditions overall for high tech manufacturing businesses would be better. Only 15% of those questioned said they felt that overall business conditions for high tech manufacturing businesses would worsen.

When asked what they saw as the main areas of opportunity for their business, the buoyancy of some global markets was cited as the main reason, with 23% saying export to global markets was the biggest opportunity. 13% said it was general overall demand for their products and services, while 11% cited new technologies and innovations as providing strong opportunities for them.

Major barriers cited were the economy (seen by 17% as a major barrier for their business), high operating costs including raw material costs (cited by 16% as an issue), and access to capital (cited by 16% as a barrier to growth).


EMPLOYMENT:

A positive balance of 44% expect their employee numbers to increase over the next 12 months with average increase in headcount estimated to be 5.7%.


INTERNATIONAL AND DOMESTIC TRADE:

These businesses are very active internationally with over eight in ten (82%) seeing at least some of their revenue derived from exports.

Nearly half (46%) of exporters have seen the proportion of turnover accounted for by exports increase with an average uplift of 9.6%. Meanwhile almost two-thirds (62%) of exporters foresee an increase in the value of international orders with an average rise of 12.3%.

Half (50%) predict that orders from UK customers will increase in 2011, with less than one in ten (8%) expecting a decline. Although the average predicted increase of 5.8% exceeds forecasts for the UK economy as a whole, this is ‘only’ about half the growth envisaged for international orders.


CAPITAL INVESTMENT R&D:

While providing a very positive picture of a specific area of the UK economy, there is the sense that things could be better still. Among those ‘in the market’ for capital, almost three times as many (37%) regard the terms on offer as being “unacceptably strict”, or that capital is “impossible to obtain” than consider it to be “readily available” (13%).

Respondents also felt more could be done to develop better conditions overall for high tech manufacturing in the UK. While 75% said they felt positive about the current performance of their own business, only 36% said that overall conditions for UK high-tech manufacturing/technology businesses were positive.