Prospects for UK manufacturers are likely to remain subdued in 2013, says Barclays Bank’s head of manufacturing in the north, Chris Forrest.
Mr Forrest believes manufacturers are going to find it increasingly hard to compete on cost in Europe, but says this could spur them to target sales in emerging countries that are “rich in growth.”
“While British products may face price pressures in Europe, the market conditions are heavily in our favour in India, China and beyond,” says Mr Forrest.
“Manufacturers have faced considerable cost pressures over the past couple of years as input prices have been driven higher by rising commodity prices and weak sterling. As a result input price inflation has tended to outpace that of output prices, often by a considerable margin, consequently impacting manufacturing companies’ profitability.
“Looking ahead, pressure on profit margins is likely to persist in the near term as UK manufacturers continue to struggle against economic headwinds due to the weak global economic environment,” Mr Forrest warns.
Barclays’ manufacturing expert in the north says manufacturing investment has grown strongly over the past year, with companies taking a renewed interest in investing in research and development.