The ageing machinery, and other assets, of the UK’s manufacturing sector is now worth less than it was in 2005 following years of underinvestment during the recession, our research has found.
Underinvestment by manufacturers in their business assets may have seen their value erode by £8.4 billion pounds from the start of the credit crunch in 2008 to stand at £245.5 billion at the start of 2014. At current rates of investment, this will mean that the manufacturing sector will have experienced a lost decade of investment.
Our managing director, Peter Alderson, says that higher levels of capital investment in new machinery and IT is required if UK manufacturers are to keep pace with rapidly growing companies in emerging markets.
More money is now being made available to UK businesses through alternative forms of finance, such as leasing, meaning manufacturers are now beginning to invest again.
Peter Alderson adds that the Purchasing Manager’s Index (PMI), a measure of confidence in the manufacturing sector, points to improved expectations for coming months. With manufacturers expecting growing order books they will be looking to invest in plant in order to grow.
With bank lending still difficult to access for some, an increasing number of companies have found a solution by using specialist asset finance brokers. Asset finance allows firms to invest in their machinery, IT and other equipment, without making large commitments of capital upfront.
Here at LDF we are aiming to increase the amount of funding we provide to businesses through asset finance. We have recently worked with manufacturers throughout the UK to fund their plans for growth. We are able to fund a broad spectrum of capital expenditures, including IT hardware, office refits, manufacturing and engineering equipment, plant and commercial vehicles.
