Bank lending to the manufacturing sector as a whole has slumped 33% from £33bn before the credit crunch in September 2008 to £22bn in January 2012, piling more pressure on independent funders to prop up UK manufacturers, claimed independent finance provider Syscap.
Despite news from the Food and Drink Federation (FDF) that the food manufacturing sector remained one of the UK's few growth industries during the recent economic downturn, with domestic and export sales remaining healthy and new product development and total investment increasing in 2011, the FDF recognised that small- and medium-sized enterprises (SMEs) were particularly vulnerable to lack of investment.
Angela Coleshill, FDF director of competitiveness, told FoodManufacture.co.uk: "Access to finance is a problem in particular for SMEs, as banks have tightened lending criteria and are more risk-averse, affecting ability to invest in order to drive future growth."
With bank support in short supply, businesses are increasingly turning to leasing to fund purchases, claimed Syscap. It reported that new funding arrangements were up 7% last year, from £3.2bn in 2010 to £3.5bn in 2011.
Philip White, chief executive of Syscap, said: "The government has called for a 'march of the makers', with economic growth spurred by manufacturing-led exports. However, without financing, that is not going to happen."
Final figures from the FDF's 2011 business confidence survey showed that volume output for 2011 started strongly, with 70% of its respondents reporting sales increases. Actual sales remained more in line with expectations during Q3 and Q4 but still continued to grow.
Despite a weaker domestic picture, export sales for the sector grew strongly and, according to the FDF, food and non-alcoholic drink exports totalled £12.1bn, which is an increase of 11.4% on the previous year.