In this article we share the latest findings from the SWMAS Winter 2017 (Q3) Manufacturing Barometer report, a regular survey that outlines the latest trends, current views and confidence of manufacturers across the South West of England. The information has been gathered from over 120 senior decision makers working across a variety of South West manufacturing SME’s. Their views provide invaluable insights into how businesses in this sector are performing and give some indication of what is possibly just around the corner.
Last quarter’s Barometer reported manufacturers’ intention to improve productivity through focusing on existing people and processes. So it’s not surprising that this latest quarter’s Special Focus takes a longer and harder look at exactly how businesses are managing their productivity improvement efforts. ‘Productivity and Culture’ explored how they manage productivity at each level – strategic, leadership and delivery of change.
The main message coming out of this latest quarterly report is the fact that three quarters of the region’s SME Manufacturers are expecting that their sales will increase over the next six months. This represents the highest figure recorded since Quarter 3 2013 (when the figure was 78%) and higher than the national figure of 72% and is a reflection of the confidence of business leaders in the South West. Only 6% of respondents expect their sales to fall – the lowest figure recorded since 5% in Q1 2014.
This upbeat assessment is underlined by the fact 65% of manufacturers in the South West region anticipate an increase in profits over the same period. On the other hand only 46%of those who took part in the survey reported a growth in profits over the last half of 2017. The gap between predicted sales increases and actual increase in profits over the last six months continues to raise questions about productivity.
Encouragingly, 58% of those interviewed stated that they aim to deliver against their growth targets by investing in machinery and premises. This is a rise of 15% compared to the last quarter’s Barometer report, again suggesting that there has been a slight surge in confidence.
The Quarter 2 2017 Manufacturing Barometer also revealed that many manufacturers were prioritising development of existing people and processes. Moving forward to this quarter, 53% of contributors to the report say they plan to recruit new staff. Although this figure is a big 12% up on the previous quarter it may not be quite in step with anticipated growth – this finding one more raises questions around the ability to find suitably qualified staff to feed business growth. That’s something which came through in the Barometer feedback last quarter and the conversations SWMAS Productivity Specialists say they are having with business leaders. Whilst some manufacturers are achieving growth by investing in new machinery and premises the need to improve productivity through developing existing staff and facilities remains an important focus.
This quarter the SWMAS team behind the Manufacturing Barometer asked manufacturers to evaluate the extent to which productivity good practice is being integrated into the culture of UK SME manufacturing businesses.
At a strategic level respondents revealed that they are making efforts to achieve their productivity goals. Around 70% said they were confident that they have mostly or completely defined productivity improvement as a key strategic objective, and that productivity improvement is championed by the board and senior managers. Having said that there is a slight softening of that confidence (63%) when it came to identifying budgets and resources specifically targeted at driving productivity improvement. None the less overall the manufacturers mostly take the view that a focus and drive for productivity improvement is integrated at a Strategy and Vision level within their organisation.
When the SWMAS consultants explored the subject of productivity improvement at the Leadership and Management level the data strongly indicated that most manufacturers were keen to achieve better results.
What’s more, it was apparent that department leaders measure and communicate current and targeted performance in very different ways. This indicates that the effective measurement and communication results could be a factor in how successfully businesses manage to deliver and achieve their productivity improvement goals.
The final phase of the report considered how best to deliver and sustain productivity improvement. This highlighted that fact that whilst most manufacturers recognised the importance of effective implementation, and of sustaining the improvements, many admitted that they did not do not always perform well in this area and accepted they achieved results which were often disappointing. Over 40% of South West manufacturers identified that they would like to improve performance across all three activities at the level: having resource in place, enhancing the engagement of their existing people in identifying and improving productivity, and their ability to sustain and share learning about the changes made.
In general terms the manufacturers covered by the barometer report were confident that they would grow their business and make a profit. However, as recent history demonstrates, the progress might be rather less impressive than they hoped, particularly if underlying barriers to improving productivity are not addressed. As far as capacity to grow was concerned, the responses recorded this quarter show that this is unlikely to come from new staff or investment alone (just over 50% of respondents intended to recruit and 58% intended to purchase new machinery and premises), so there’s still a strong focus on enhancing productivity by getting more out of existing people and processes.
The Special Focus this quarter underlines how difficult it is to engage staff in the process of increasing productivity and highlights that this is one of the biggest challenges when it comes to delivering and sustaining the improvements required by businesses. Following this conclusion, the findings of the Winter 2017 (Q3) Manufacturing Barometer suggest that workplace culture at this change level has to evolve. It suggests there is an urgent need for manufacturers to look harder at how they involve their leaders and their people to unlock their own hidden potential and achieve their productivity ambitions.
We have taken this on board at Dymond Engineering – not just to boost our growth but to give customers even more competitive prices and shorter lead times. So if you are looking for bespoke metalwork, metal component parts, fixtures and fittings or even high quality game bird feeders, give us a call.