Experts warn West Midlands manufacturers will struggle to recover from downturn

Nov 9 2009 by Graeme Brown, Birmingham Post

Experts say West Midlands manufacturers will struggle to recover from the economic downturn unless banks and other lenders offer credit at reasonable rates.

Simon Griffiths, chief executive of the Manufacturing Advisory Service-West Midlands (MAS-WM), said small and medium enterprises (SMEs) are losing contracts, unable to pay suppliers and facing daily difficulties because of unfair lending conditions.

He said: “Recent surveys by the EEF and CBI (Confederation of British Industry) predict an upturn in manufacturing over the next six months and whilst we should all welcome this news, we have to be mindful of history telling us that a lot of firms fall victim of the growth that follows a recession.

“That is why it is so important that banks and other lending institutions treat manufacturers fairly and ensure they have the same access to finance and loans as other sectors so they can continue to trade, win new business and move a sector that employs 330,000 people locally back into positive territory.

“We have lots of anecdotal information about credit insurers refusing to guarantee new orders and funding only being offered at unreasonable rates.

“This I feel is beginning to change in recent months and can only be helped by the Government’s desire to force banks to lend to SMEs. We’re not asking for favours or hand-outs, just a level playing field so that our well-run and often world class businesses have the best possible chance to lead the West Midlands out of recession.”

Businesses in the region should take advantage of sterling’s strength against the euro to drive up profits, according to Mr Griffiths. West Midlands manufacturers are about 30 per cent more competitive than two years ago, but exporting further goods would be impossible without money and credit insurance from the banking system.

Mike Rogers, joint director of R&M Metal Finishing in Lye, knows too well the difficulties of accessing finance after his business suffered from a large drop in sales and bad debts from bankrupt van maker LDV. He said: “The problem is the Government are using the banks to kickstart the economy and no matter how desperately they urge them to increase funding they have very little control over what they do and it’s companies like ours that feel it on the ground.”

MAS-WM is partly responsible for delivering a £4.5 million public sector initiative called the Automotive Response Programme, which provides grants of up to £50,000 to help business strategies.

Mr Griffiths said: “Over £3.9 million has already been committed and there are more than 20 applications currently being processed every week - in total, this funding will help more than 150 companies and safeguard 1,000 jobs locally.”