Fewer manufacturing companies entering administration

News Article - 26 July 2010
Category: Business

According to recent research from accountants Deloitte, the number of UK manufacturing firms entering administration fell sharply in the first six months of 2010. Figures show 167 manufacturing companies entered administration in the interim period from January to June of this year, a 46% fall from 311 firms in the same period last year.

Across all sectors, this was one of the highest levels of improvement, second only to the retail industry. Across all industries, the number of businesses entering administration in the same time period fell 43% from 1856 to 1065.

The new figures will be welcome news for the manufacturing industry, which was hit particularly hard by the economic downturn. In 2009, over 526 manufacturing companies fell into administration, 17% of the total number in the UK across all sectors. Only the construction industry suffered greater losses, with 20%. Many manufacturing firms were also forced to lay off significant numbers of employees in order to cut costs in the face of rapidly decreasing demand.

The latest figures undoubtedly show that market conditions are improving for manufacturing firms. However, companies should be wary as demand has not yet increased sufficiently to give the sector the boost it needs to return to pre-recession levels.

Order books are picking up, but businesses have tightened up operations due to lower levels of working capital and so are unable to restock easily if required. An exacerbating issue is corporate investment in capital expenditure, which remains tight following the economic downturn. Whilst many different issues affect manufacturing output, end demand and business investment are two key drivers that must increase if recovery is to move to the next level.

Because sector outlook will continue to be uncertain until demand rises significantly, companies must take greater control of projects and address internal inefficiencies to increase profitability. The project and job costing module of Access business software can help; with the ability to input an unlimited number of cost types, manufacturing companies can more easily track the real-time cost of any individual project.

For more information, please call Access on 0845 345 3300.

Article keywords: Deloitte, UK manufacturing firms administration, insolvency, bankruptcy, retail industry, manufacturing industry, economic downturn, manufacturing companies, project and job costing module, Access business software

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