Published: 10th October 2016
Figures released in 2014 by the Office for National Statistics show that 25% of jobs in the UK were in the manufacturing industry in 1978. By 2014 this figure had fallen to just 8%, although productivity in the industry increased.
‘Lean’ methods of manufacturing have made better use of resources, reduced waste and focused on smoothing out the manufacturing process at a basic level. But despite this, insolvencies within the industry are relatively high, with companies finding it difficult to remain solvent once financial problems arise.
At the end of the first quarter 2016, the manufacturing industry had already experienced 333 insolvency events. So are industry-specific problems causing firms to decline, or does the blame lie more with a changing global economy?
Emerging markets in the east are competing on price, driving down profitability for companies in established manufacturing countries, where firms may be unable to compete on price alone.
Many firms in the UK use high levels of customer service to differentiate themselves, perhaps moving into advanced technology sectors to offer a solution-based combination of product and service.
Manufacturers must deal with various external elements over which they have no control, but that have a detrimental effect on their business, including:
With many production processes being outsourced rather than carried out in-house, manufacturing firms in the UK are focusing on ideas and innovation to drive business growth.
If your manufacturing company is struggling to stay afloat and you fear insolvency, there are several potential routes that could help you survive. Real Business Rescue has many years of experience in helping manufacturers to avoid liquidation, and return to profitability for the long-term.
Our contacts with traditional and alternative lenders, along with a detailed knowledge of the manufacturing industry, means you get the best recommendations for funding your business.
Seeking professional help should be a priority when the company’s financial situation is so critical. We’ll be able to advise you on the best course of action, which may include one of the following formal insolvency procedures.
A Company Voluntary Arrangement prevents any legal actions your creditors might be threatening, and halts all existing measures to force your company into liquidation. You remain in control of the business, and repay your creditors at an affordable rate that is negotiated by the appointed insolvency practitioner (IP).
If HMRC are threatening to wind up the company, we may be able to negotiate a Time to Pay arrangement that covers your tax and National Insurance arrears. Falling behind on these liabilities is a serious concern, as HMRC are known to take legal action against non-payers quickly.
If a pre pack administration is appropriate, jobs may be saved as the underlying business is sold to a new buyer – this could be a third party buyer, or the current directors who make the purchase using their own personal monies.
If you fear the company could be forced into liquidation, you may want to consider a Creditors’ Voluntary Liquidation. This process places directors in a better light and helps to avert any accusations of wrongful or unlawful trading, as creditor interests are prioritised over those of the company, its directors and shareholders.
With 78 offices across the UK, you’re never far away from expert and confidential advice. We specialise in business turnaround and recovery, and offer a same-day meeting free-of-charge to discuss your needs.