Asset-Based Lending steps up to boost manufacturing recovery in the North West
A recent report1 from Make UK, the manufacturers’ organisation and accountancy and business advisory firm BDO LLP, has emphasised the critical importance of manufacturing to the North West economy.
According to the study, the North West stands out as the UK’s most productive manufacturing region, with industry accounting for 15% of the regional economy. Furthermore, the North West supports 342,000 jobs in key manufacturing sectors, almost 1 in 10 of the total regional workforce. The region also accounts for almost 8.2% of total UK manufacturing exports.
Undoubtedly, the impact of Covid-19 coupled with Brexit uncertainty, has significantly affected the Automotive and Aerospace sectors. However other sectors such as Transport Equipment, which accounts for almost a fifth of output (17.7%), as well as the Pharmaceutical and Chemicals sectors, have performed strongly, offsetting some of the toughest impacts of the pandemic.
British manufacturing shoulders recovery
Calling for an investment boost to free up cash for recovery, Stephen Phipson, Chief Executive of Make UK, highlighted the vital role that manufacturing has played during the crisis2 : “British manufacturers rose to the challenge earlier this year to help the country through a national crisis. They helped keep food and drink on supermarket shelves, adapted production to make vital PPE for our care homes and made sure hospitals had the medicines they needed during the pandemic.”
Steady growth in manufacturing output gives rise to positive sentiment
IHS Markit’s UK Manufacturing Purchasing Managers Index (PMI) also showed steady growth in output and new orders in September3, as Rob Dobson, director at IHS Markit commented: “Business sentiment remained positive as a result, with three-fifths of UK manufacturers forecasting a rise in output over the coming year.”
Industry 4.0 – The drive for digitisation
PwC’s 23rd Annual Global CEO Survey report4 has urged manufacturers to maintain a relentless focus on agility: “At a time of significant uncertainty, IM leaders need to avoid the temptation to hunker down and instead continue building agility on all fronts of the business.” The report cited extending digitisation beyond legacy information systems to core operations as well as products and services.
Key manufacturing trends to watch5 include the Internet of Things (IoT), predictive maintenance, 5G/Smart manufacturing, virtual reality (VR) and augmented reality (AR), in addition to cybersecurity. The Made Smarter Leadership Programme6 , introduced at Lancaster University, Manchester Metropolitan University and The University of Liverpool, will help to further accelerate this trend, enabling the adoption of digitally-based manufacturing techniques, skills and strategies in the region.
The pivotal role of asset-based lending (ABL) in powering manufacturing recovery
The resilience of the manufacturing sector in the North West has, once again, proved to be a bedrock of the economy, demonstrating leadership and agility in times of crisis and unprecedented change.
Asset-based lending has a pivotal role in providing the quantum of funding required for manufacturing businesses, not only to withstand the prevailing economic turbulence but also to come out stronger from the crisis by financing investment in new technology deployment and acquisitions.
In a volatile environment, more and more businesses are looking to the strength of their assets to finance their future. As a result, Asset Based Lending (ABL) has come to the fore in creating the predictability and stability that businesses need. ABL unlocks high levels of working capital across all asset classes with Invoice Discounting at the core, supplemented by loans against Stock, Plant & Machinery and Property. Cash flow loans are also available, subject to EBITDA, to secure even higher levels of working capital.
More than £100m to deploy to SMEs across the North
Praetura Commercial Finance has recently completed an increased syndication of its debt facilities, meaning it now has more than £100m to deploy to SMEs across the North7. The funding will be made available to SMEs, offering innovative working capital solutions for a variety of event-driven transactions, including acquisitions, MBOs, refinancings, turnarounds and growth requirements. Meanwhile, Praetura Commercial Finance has also increased the size of its Manchester-based team to provide additional resource to support its growing clients.
Let’s start a conversation.
All of the companies we work with are in the process of change, seeking to navigate the next stage of growth in challenging times. To discuss your funding requirements in confidence, please call 0161 302 6310 or email me at firstname.lastname@example.org. We look forward to hearing from you.
1 BDO in United Kingdom. (2020, July 03). Make UK/BDO annual survey highlights vital importance of industry to North West but Covid impact hitting key sectors. https://www.bdo.co.uk/en-gb/news/2020/make-uk-bdo-annual-survey-highlights
2 Industry calls for Business Rates and Investment boost to free up cash for recovery. (n.d.). https://www.makeuk.org/news-and-events/news/industry-calls-for-business-rates-and-investment-boost-to-free-up-cash-for-recovery
3 UK manufacturers continue recovery from COVID-19 slump. (2020, October 01). https://uk.finance.yahoo.com/news/ihs-markit-uk-manufacturing-pmi-september-brext-covid-19-coronavirus-083630632.html
4 PwC. Industrial manufacturing trends 2020: Succeeding in uncertainty through agility and innovation. (n.d.) https://www.pwc.com/gx/en/ceo-survey/2020/trends/industrial-manufacturing-trends-2020.pdf
5 Association of Equipment Manufacturers. (2020, January 03). 5 Manufacturing Trends to Watch in 2020. https://www.aem.org/news/5-manufacturing-trends-to-watch-in-2020
6 Smart manufacturing programme rolls out to North West universities. (2020, October 13). https://www.businesscloud.co.uk/news/smart-manufacturing-programme-rolls-out-to-north-west-universities/
7 Ord, M. (2020, July 22). Praetura syndication sets up £100m SME fund. https://www.insidermedia.com/news/north-west/praetura-syndication-sets-up-100m-sme-fund