Underinvestment by manufacturers in their business assets may have seen their value erode by £8.4bn from the start of the credit crunch in 2008 to stand at £245.5bn* at the start of 2014. LDF says that, at current rates of investment, this will mean that the manufacturing sector will have experienced a lost decade of investment.

 

Since the credit crunch, UK businesses have put off capital investment as a result of a shortage of funding from traditional sources. However, with more money being made available through alternative forms of finance, such as leasing, manufacturers are now beginning to invest again. Higher levels of capital investment in new machinery and IT is required if UK manufacturers are to keep pace with rapidly growing companies in emerging markets.

 

LDF adds that the Purchasing Manager’s Index points to improved expectations for coming months. With manufacturers expecting growing order books they will be looking to invest in plant in order to grow.

 

With bank lending still difficult to access for some, an increasing number of companies have found a solution by using specialist asset finance brokers. Asset finance allows firms to invest in their machinery, IT and other equipment, without making large commitments of capital upfront.

 

Peter Alderson, MD of LDF says, “In the last six years the value of UK manufacturers’ equipment has dropped, while key global rivals in China, Korea and Taiwan have invested relentlessly. If UK manufacturers are going to compete, a huge programme of investment is needed to catch up.”

 

“The pace of technological change means that equipment becomes out-of-date more quickly than ever before. In a globalised economy the UK’s manufacturers are competing with businesses from all corners of the planet. Any inefficiency translates to either higher costs for customers or lower profits for manufacturers.”

 

“The recent uptick in manufacturing confidence shows that manufacturers know they have an opportunity to grow.”

 

*Net capital stock in UK manufacturing (at chained volume measures i.e. adjusting for inflation). Source: ONS