A rise in UK manufacturers closing their doors!
02 August 2017
The UK manufacturing sector sees a 19 percent rise in company failures in the second quarter of 2017, new research reveals.
The number of business failures in the UK’s manufacturing sector rose by 19 percent in the second quarter of 2017, with 465 manufacturers closing their doors compared to 391 in Q1, while sales revenues stagnated and edged down by two percent.
The figures have been released in the Creditsafe Watchdog Report, which tracks quarterly economic developments across the Manufacturing sector in addition to 11 other sectors (Farming & Agriculture, Construction, Banking & Financial, Hospitality, IT, Professional Services, Retail, Sports & Entertainment, Transport, Utilities, Wholesale).
The gloomy findings for the sector, in which sales revenues dropped by over £11bn to stand at £649.8bn in Q2, were further underlined by a significant 33 percent increase in bad debt owed to manufacturing companies. Bad debt rose to £15.6m, where in Q1 it was at £11.8m. In addition, the number of new startups in the sector also fell, by 14 percent to 4,935.
Brighter spots for the UK’s makers were that the amount of bad debt owed by them to their suppliers fell by over a quarter to £28.7m. Furthermore, whilst the number of business failures jumped higher, the number of manufacturers with CCJs against them fell by 15 percent from just over 1,000 to 856.
Rachel Mainwaring, Operations Director at Creditsafe, commented: “Figures in today’s Creditsafe Watchdog reveal that it has not been a good second quarter for our all-important manufacturing sector. The picture nationally across sectors is of business confidence slumping, with sales down and bad debt up, and manufacturing is a prime example of this.
“Manufacturers have at least made good progress in bringing down their own bad debts owed to suppliers, a sign that they are focusing on effective cash management. But they need a strong third quarter to steady the ship and bolster national productivity.”
Creditsafe’s research also revealed the risk level of insolvency for businesses operating within the manufacturing sector. Of the 174,363 currently active companies, 7 percent (12,300) are classified as being at Very High or High risk.
For further information on the methodology behind the figures, please see the full report here.