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20/08/2018

Manufacturing: use the summer shut down to get investment ready

20/08/2018

Manufacturing: use the summer shut down to get investment ready

Bells sound. Pencils down. School’s out for summer. UK families are currently in the midst of the long awaited summer break, with people up and down the country taking a much needed rest as schools close for 6 weeks. Similarly, within parts of the manufacturing industry, many factories are experiencing a 2 week break.

With origins dating back to the industrial revolution there is a tradition, colloquially known as “factory fortnight”, where manufacturing businesses down tools and shut up shop for 2 weeks. A time for maintenance, planning and reviews, decision makers within supply chains may find this an appropriate time to ready their SME business to capitalise on growth ambitions.

Factory fortnight allows many directors to stop and take stock of the overall aims and objectives of the business, and the strategy in place to achieve them. Removing the daily pressure of securing and fulfilling orders creates enough time and breathing space to look at the business plan and analyse the next steps. Whether it’s a complete U-turn or some minor amendments, it’s important to show existing and potential stakeholders that the business plan is up to date and realistically reflects recent trading conditions as well as current market trends.

Hennik’s 2018 Annual Manufacturing Report describes UK manufacturers showing resilience in the face of a challenging landscape, and many SMEs are responding to these challenges in a positive way by seizing opportunities for export and innovation. Research conducted by the Bank of England supports this outlook, as growth in goods exports combined with improving profit margins has strengthened investment intentions in manufacturing.

However, there is a vast array of funding options for SME manufacturers in the UK, with asset based lenders (ABLs), alternative fund managers and traditional banks all providing different packages with varying costs and risk tolerances. Taking the time in the summer shutdown to meet with fund managers, corporate finance advisors or accountancy firms specialising in sourcing capital for manufacturing businesses can be the first step to securing investment.

Factory fortnight offers a good opportunity for manufacturing businesses to assess enquiries and forthcoming orders, either directly from Prime or Original Equipment Manufacturers (OEMs), or supply chain companies at Tier 1, 2 etc. When producing components as part of a larger assembly chain tooling can be especially critical to fulfilling orders, so it’s important to take the time to analyse the cost-benefits and time constraints. Funding options, such as the National Tooling Loan, can bridge the working capital gap between an OEM placing an order and making payment months or years later.

If you’re a manufacturer in England pursuing new or confirmed projects, The National Tooling Loan Fund supports eligible component manufacturers and toolmakers in any sector to design, develop and manufacture tooling, with investment available up to £2million. For more information email mariekelly@frontierdevelopmentcapital.com  or call 0345 319 4528.