Exports Increase Boosts Small Manufacturers

A third of small manufacturers increased their export orders in the three months to April, mainly due to the weakness of the pound, research from the Confederation of British Industry (CBI) has found.

The CBI SME Trends survey of 400 small manufacturing firms found that 33% received more orders from overseas than in the previous quarter, with just 15% receiving fewer. The research also highlighted that domestic demand rose in the first quarter of 2010, with 36% of firms increasing their orders.

“The UK’s smaller manufacturers are finally reaping the benefits of all their hard work as well as a relatively weak currency,”

said CBI SME council chairman, Russel Griggs.

“Exports are growing steadily, domestic demand and production are stabilising, and firms are feeling more upbeat about their prospects.”

“With demand expected to grow in the coming months, manufacturers are thinking about taking on staff.”

Manufacturing association EEF spokesman, Mark Swift, said that much of the increase in exports was due to demand from markets in the Far East.

“UK firms have seen a good pick-up in demand recently from countries such as China and India. Demand from the Middle East has also increased over the last few years.”

“However, you can have the most competitive exchange rate in the world, but if your export markets are flat on their backs it won’t make any difference. For example, Sterling is favourable against the euro at the moment, but there are still better areas for firms to export to because the European markets are sluggish compared to the rest of the world. Firms need to research where the demand is for their product, as it will depend on their sector.”

The SME Trends survey also highlighted that raw material costs have increased. Swift said that manufacturing firms are likely to raise their prices to recoup this.

“The rising price of raw materials has the potential to wipe out profit margins and also to take away some of the advantage of our weak currency. However, we have found that many firms are developing smart strategies to cope with this. For example, some manufacturers might decide to source raw materials or components closer to home if possible, to save on transport costs.”

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