If the bottom 75% of Britain’s smaller businesses with lower productivity upped their game to the output of top 25% - UK GDP could see a boost of £270 billion
Britain’s manufacturers are calling on the Government to improve access to funding for small and medium-sized manufacturers to allow them to fulfil their true growth potential.
New research, “Start up to scale up: Supporting SMEs to Grow” published by Make UK showed that if 75% of Britain’s smaller businesses with lower productivity upped their game to the output of top 25% - UK GDP could see a boost of £270 billion, as estimated by the Bank of England.
The scale-up challenge for Britain’s manufacturers is different from the average business due to the cost of heavy-duty equipment and industrial real estate. Manufacturers’ investment cycles are longer, with growth slower than traditional firms. Profit from any investment takes longer to show with banks and lenders requiring to exhibit “patient finance” rather than just quick returns. Companies may even look like they are making a loss in the short term, until the investment benefit kicks in slightly further down the line.
The research further uncovered that Government must understand that manufacturers need “heavy investment” to expand, with benefits seen over the longer-term rather than short term gains. However, the long-term rewards are far greater than other sectors in the economy and this investment will create well-paid jobs across the whole of the UK. By focusing on the scale up of manufacturing firms, Government will help create jobs in those left behind areas. If this approach were to be coupled with easier access to land and improved infrastructure, manufacturers could expand into totally new parts of the UK where the industry has never traditionally been based.
Micro and SME manufacturers account for 99% of all manufacturers in the UK but they are being held back by a lack of access to funding, skills, physical space and exporting. Many of these issues are shared by other industries on the surface but when you get into the details it is clear the challenges faced by manufacturers differ fundamentally from the average SME. Manufacturers need access to higher levels of skill than most, they need access to finance to not only stay afloat but capital lenders that are willing to be patient before they see growth from any investment.
