In recent times, SFP has seen a number of engineering firms – and more particularly those in the precision engineering and manufacturing sector – struggle to maintain a healthy cashflow. Over the course of the past two years, in fact, it has been appointed Administrators to no less than six ailing engineering firms, including Denroy Precision Engineers, Zenith Precision Engineering, JGP Engineering, Specialist Engineering Contracts, and BRK Precision Engineering; not an alarmingly high number, perhaps, but still a noticeable trend and a concern for those within the sector.
The latest of these appointments was Active Technologies, based in Hethel, near Norwich. The company specialised in developing engineering solutions and manufacturing performance products for a number of applications – including within the aerospace, automotive, marine, industrial, renewables, and oil and gas sectors – from its three separate divisions: AT Power, AT Renewables and AT Precision.
Among its products were its billet-machined housings for its patented Throttle Body products. It had partnered with global companies such as Shell Racing Solutions, Toyota Motorsport and Omron, and indeed appeared to have strong prospects. Moreover, it had also been nominated as one of the Eastern Daily Press (EDP)’s ‘Norfolk Future 50’ 2012: a list naming innovative and entrepreneurial companies in the Norfolk region that demonstrated ‘a track record of rapid growth, or the potential to achieve it’, ‘a belief in success’, ‘an appetite for risk’ and ‘a venture that has made an impact on its marketplace’.
However, in spite of its £2.5 million annual turnover, at the end of last year it encountered financial difficulties resulting in debts of approximately £400,000. This eventually led to the appointment of SFP’s Simon and Daniel Plant – both licensed members of the Insolvency Practitioners’ Association – as Joint Administrators on 27th November 2012. Though SFP was able to secure a sale of the AT Power division, which primarily serviced the motorsport sector, to two former staff, the AT Renewables division – which focused on energy solutions – and the AT Precision division could not be saved and their assets were sold.
According to a recent survey by EEF, the manufacturers’ organisation, last year was a turbulent one for many UK manufacturers and saw output decline for the first time since 2009. Despite this, however, the majority of manufacturers did not claim to be feeling too downbeat about their prospects in the year ahead, with many still indicating a ‘steady as she goes’ attitude.
Terry Scuoler, Chief Executive of EEF, says that although the past year has been a challenging one for manufacturers there is still potential for growth in 2013: “The increased investment in innovation in recent years will bear fruit as companies see opportunities from new product development and the commercialisation of new technology.
“These efforts will provide a platform for UK exporters to compete in faster growing markets and support efforts to diversify into new global supply chains,” he says.
“There is, however, no getting away from the clouds that linger on the horizon. While the risk of a break in the Eurozone has diminished, conditions remain difficult, leading to continued caution in business planning. At the same time, concerns around the wider global demand picture have grown amongst manufacturers.”
In spite of this uncertainty, a further survey from EEF reported an improvement in credit conditions in the latter half of last year, with responses from UK manufacturers showing that both availability and cost of new lending had improved. Moreover, a new question in the survey suggested that demand for external finance is set to increase this year, with over a fifth responding that they expected their financing needs to grow in order to support their investment plans, and less than five percent expecting their demand to reduce.
Lee Hopley, Chief Economist at EEF, comments that the modest improvement in lending is encouraging: “With companies expecting their demand for external finance to increase next year, progress on increasing the flow of credit and getting the cost down has to be sustained and built upon going forward.”