Most small manufacturers now plan to raise their prices. According to the skills charity Enginuity, nearly 80% of the engineering and manufacturing SMEs in its latest survey are under pressure to put prices up. Labour and raw material costs are the reason. The findings were reported on 5 October.
01What the survey found
Enginuity runs a regular snapshot survey of small and medium-sized firms in engineering and manufacturing. According to its latest results:
- Prices: nearly 80% are under pressure to raise prices because of labour and raw material costs.
- Passing costs on: almost three-quarters plan to pass rising costs on to customers. Enginuity says this is the first time most firms in its survey have planned to.
- Capacity: two-thirds are not running at full capacity, for the second year running.
- Confidence: fewer than 40% feel confident about the next three to five years.
Enginuity has not published how many firms answered this wave.
02Why capacity is still below full
Enginuity links much of the problem to skills. It estimates that skills-related challenges cost engineering and manufacturing around £5.2bn of lost revenue a year.
The survey also found that money is the biggest barrier to investing in skills. According to Ann Watson, Enginuity's chief executive, small firms are telling the charity they "cannot hold back prices any longer". She called on the Chancellor to help them afford extra staff in the coming Budget.
03Options when costs keep climbing
Raising prices is one response. Some firms will also look at what they can change inside the business.
For a workshop short of skilled hands, newer equipment can be one way to get more out of the same team. A faster machine, or one that needs less setting up, can free up hours.
The finance needs to match the kit. Hire purchase, leasing, a business loan and your own cash each suit a different kind of purchase. Our guide to business equipment finance sets out how they compare and what a lender will check.
If you are weighing up an investment, talk to us about growth finance and we will look at what fits.
