From the mills of the 1900s, our manufacturing industry has transformed into one renowned for cutting-edge facilities, high-quality goods, complex processing and being at the forefront of technological development. This puts businesses within the industry at a historical advantage, but they have to work hard to maintain their edge against competing nations. In the face of this competition, price and margin are critical components of delivering success.
The current climate has created challenges for business owners across all sectors, but there are several that have the potential to hit the manufacturing industry even harder, particularly Brexit and skills shortages.
British business has taken a serious hit as a result of the uncertainty that Brexit has bred. Stockpiling in anticipation of a March exit from the EU, as evidenced by the latest CBI industrial trends survey, tied up much-needed cash at a time when business leaders were already doubling down on cash reserves to prepare for hardships. This focus on the short term has impacted on capital investment for the future and training.
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While UK economic growth recently picked up with the help of stockpiling by manufacturers, the fear is that this will have an impact on growth and GDP for the rest of the year as companies unwind the position. In the long term, it is not a sustainable way to operate and it hides the truth that businesses are not investing. Spending on plant, machinery and building is expected to continue to fall, as well as investment in training and innovation. We understand that it is a careful line to tread: balancing the need to invest in the future, with protectionism over the short term and uncertainty. Despite political turmoil, we believe those businesses that continue to invest will be the ones that succeed.
One way to access funding for investment is through asset-based lending. Businesses can leverage the value of these higher stock levels, as well as other assets on the balance sheet, allowing them to release capital and invest for the future. At Nucleus Commercial Finance, we have seen strong demand in the first quarter of 2019 for all forms of alternative finance, particularly from manufacturers. Many manufacturers recognise that complacency can be lethal to a business and they understand that asset-based lending with an alternative lender is an ideal way to reach their growth potential.
With this in mind, it is crucial for the alternative lending industry to demonstrate the positive impact additional finance can have on business. At a time of uncertainty, we need the manufacturing industry more than ever to provide the UK economy with growth, and we believe these businesses need to invest in order to stay ahead of the curve, as ultimately investment can lead to greater future success.