Recent research has shown, confidence levels within the manufacturing sector jumped in the third quarter of this year and consequently, many businesses are looking to invest in research and development.
The survey which was conducted by business adviser BDO, (which looks at confidence levels in the sector over half a year), revealed 49.5% of respondents were optimistic regarding the outlook for their business over the next six months. The researchers found an increased positivity compared with the second quarter of the year, when only 37.3% said they felt confident.
Those questioned included directors from Aerospace, Defence, Food Manufacturing, Automotive, Engineering, Chemicals and Pharmaceuticals businesses UK-wide, and while 37% of respondents said their confidence levels were unchanged, a mere 13.3% said they were negative about the next six months.
Those that do feel gloomy about the prospects for their business over the next six months were found mostly in Engineering, Technology and Electronics firms, which have suffered considerabley during the downturn in the Automotive and Consumer Electronics industries.
The good news however, is that two thirds of these firms intend to invest 1-5% of their turnover in R&D, indicating expectations of an upturn in 2010.
According to the research, 29% of businesses intend to increase R&D investment, while nearly 65% plan to keep R&D investment at the same level next year. Only a small minority (7%), plan to decrease their investment in this area.
In particular, half of pharmaceutical and chemical firms and a third of automotive and building materials firms plan to increase their R&D investment.
The results show, 28 companies report plans to spend 2-5% of turnover on R&D with two thirds of these being smaller firms, with a turn over below £30 million, in the Engineering, Automotive, Medical and Optical sectors.
The reports conclusions mirror the Governments R&D Scoreboard 2008, which found smaller companies tend to invest a larger percentage of their turnover in R&D because they are growing businesses competing in sectors where technology is constantly changing.
The results of the survey indicate that nearly half of those questioned are now more confident about the next six months, a clear pointer that the industry believes a real economic recovery is not that far off. Whereas in the second quarter of this year it was clear that negativity was rife in key manufacturing sectors we now see businesses looking to future growth, even though recovery with in the sector maybe slow it’s now clear that UK Manufacturing believes that worst is over and we have now turned a corner. Hopes are high particularly when Gross Domestic Product has seen a 0.4% increase compared with the previous quarters 0.6% decrease.