Global growth is slowing as trade spats turn into all-out war. Stockpiling for a 29th March Brexit that never happened are no longer inflating figures. EU companies are swapping supply chains out of the UK in anticipation of a “no deal”. No wonder then that new data is showing that the UK manufacturing sector has contracted significantly in May.
With that in mind, Plimsoll, the UK’s leading provider of industry and company comparison studies, has taken an individual look at the UK’s key manufacturing markets. Using the Plimsoll Model, a proven predictor of spotting early signs of companies in distress, we have been able to compare growth, profit levels and the percentage of companies in distress in 30 key markets:
| % in Danger |
Change in profit |
Change in growth rate |
|
| Pharmaceutical Manufacturers |
32% |
↓ |
↓ |
| Alcoholic Drink Manufacturers |
29% |
↓ |
↑ |
| Food Manufacturing |
27% |
↓ |
↑ |
| Furniture Manufacturing |
27% |
↓ |
↓ |
| Gift Manufacturers |
25% |
↔ |
↑ |
| Label Manufacturers |
24% |
↓ |
↑ |
| POP Display Manufacturers |
24% |
↓ |
↓ |
| Clothing Manufacturing |
24% |
↔ |
↑ |
| Auto-component Manufacturers |
24% |
↓ |
↑ |
| Paint Manufacturers |
24% |
↓ |
↑ |
| Plastic Product Manufacturers |
23% |
↔ |
↑ |
| Ceramic Product Manufacturers |
23% |
↓ |
↓ |
| Timber Fire Door Manufacturers |
22% |
↑ |
↑ |
| Bedding Manufacturers |
22% |
↓ |
↓ |
| Blind Manufacturers |
22% |
↔ |
↓ |
| Lighting Manufacturers |
21% |
↓ |
↓ |
| Packaging Manufacturing |
20% |
↓ |
↑ |
| Electronic Equipment Manufacturers |
20% |
↑ |
↑ |
| Flooring Manufacturers |
20% |
↓ |
↓ |
| Chemical Manufacturing |
19% |
↓ |
↑ |
| PVC-U Window Manufacturers |
19% |
↓ |
↓ |
| Cable Wire Products Manufacturers |
18% |
↑ |
↑ |
| Fencing Manufacturers |
17% |
↓ |
↑ |
| Carpet Manufacturers |
17% |
↓ |
↓ |
| Contract Electronics Manufacturing |
17% |
↑ |
↑ |
| Valve Manufacturers |
17% |
↑ |
↑ |
| Control Panel Manufacturers |
15% |
↔ |
↑ |
| Filter Manufacturers |
15% |
↑ |
↓ |
| Switchgear Manufacturers |
14% |
↓ |
↑ |
| Printed Circuit Manufacturers |
14% |
↑ |
↑ |
Clearly, post-referendum growth in the UK manufacturing sector has held up much better than anticipated on the back of a significant depreciation in sterling coupled with robust global demand. Out of the 30 industries we have looked at, two-thirds have continued to grow in the latest period.
However, a worrying deterioration in profitability across the sector is all too apparent. 21 of the 30 industries we have analysed are now less profitable than they were before. Have headline-grabbing growth rates been at the expense of the bottom line? Companies can only fund the vanity of retaining market share at the expense of profit for so long. The current economic climate is the wrong time to be financially compromised.
The Pharmaceuticals market is suffering the most. The market is contracting and profits are falling. A third of the UK market is already in financial trouble. The next 12 months could see significant consolidation in that market.
Elsewhere, the UK’s expertise in advanced electronics would appear to have insulated the PCB market. It has continued to see strong growth and robust profitability. The financial strength of companies in the market remains very high.
In summary, unless Brexit is brought to a successful conclusion and the increasingly damaging trade wars are called off, macroeconomic headwinds are unlikely to abate soon. As leading economists have already warned, manufacturing in the UK will bear the brunt of the downsides of Brexit and global trade conflicts. Some markets will continue to be insulated through a high demand for their products internationally. Other markets will see a continued but more rapid decline.
Plimsoll provides individual market studies on each of these industries. Each of the major companies in each market has been individually analyzed, valued and rated for potential acquisition.