Orders marred by high costs

News Article - 14 May 2010
Category: Business

The latest research published by the CBI reveals that although both domestic and international orders are increasing, profits are threatened by cost pressures. The institute's Industrial Trends Survey reveals in the three months to April, 34% of 439 UK manufacturing companies said orders rose, with 23% saying they fell. This is the first time the area has experienced growth since January 2008, with a rounded balance of +12%.

This will be good news for manufacturing companies who have experienced eight consecutive quarters of falling sales. As one of the sectors worst hit by the economic crisis, many manufacturers have struggled to remain profitable over the past two years and have had to make significant infrastructural changes, such as job cuts.

Breaking the figures down, exports have shown the biggest recovery with a rounded balance of +20%, the largest since 1995. These have been accelerated by the weak value of the pound in addition to the ongoing recovery of the global economy. Exports are expected to rise as manufacturers finish successful destocking periods.

However, costs per unit increased for 20% of companies, causing strain to the bottom line. In particular the escalating cost of raw materials is squeezing margins considerably. Many manufacturing companies report they will have to raise prices over the next three months to offset the increase. Overall, 62% of firms are working below maximum capacity, but as demand increases and the economy stabilises it is expected manufacturers will ramp up production to gain a positive position in the post-recession market place.

Access welcomes the news as a positive sign for the manufacturing industry, which has suffered during the economic crisis. However, manufacturers must not become complacent and rely on economic recovery to drive demand and improve profitability. Increased costs can be offset by improving the efficiency of internal operations and reducing project costs.

Access' manufacturing software provides essential tools that give manufacturers the power to take greater control of projects and improve efficiency in key areas. For example, order scheduling provides an accessible schedule of availability based on the flow of goods in and out, helping to guard against the company being under or over-stocked.

Please call Access on 0845 345 3300 for more information.

Article keywords: Industrial Trends Survey, order scheduling, manufacturing software

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