Manufacturer Paul Bennett outlines five principles to cope with the predicted uncertainty in the manufacturing industry in 2012.

The Confederation of British Industry predicts sluggish growth for 2012. What does this mean for SMEs in the manufacturing sector?

Over recent years, manufacturing, and its shrinking proportion of UK GDP, has been a lively topic of debate. But when listening to the radio a couple of weeks ago it was refreshing to hear Andrew Johnson, senior economist at the EEF, the main trade body for UK manufacturers, put the record straight on the sectors more recent performance. In fact, the turnaround in UK manufacturing performance over the past couple of years has been significant; with the sector’s growth outpacing the UK’s wider economic performance by some margin.

However, recent reports from the EEF suggest that this growth is now slowing as economic uncertainty across the Eurozone continues to have a widespread and damaging effect.

This news is of concern to us manufacturers as it highlights just one of the external factors impacting on our business. Equally, the government’s spending cuts will also continue to impact those manufacturers which work within the transport and defence sectors. And, access to finance, the key enabler for us manufacturers to invest in our businesses, will continue to be hard to unlock. We may be the market leader in our sector, with a very strong balance sheet, but access to credit still comes at a price. And, I don’t see this changing in the year ahead.

So if we are to face many of these head winds, I am convinced that next year should be about sticking to the following five principles:

Capitalise on the export opportunity

With the help and advice of our bank, we launched our export division last year. With predictions that global manufacturing output is expected to see a growth rate of around 4%, 2012 will be very much about capitalising on this strong growth. Exporting to emerging markets must be the focus.

Keeping the business lean

The Office for National Statistics (ONS) hasn’t really been needed to highlight how the price of materials and fuel paid by UK manufacturers has escalated over the past two years. We see this on our shop floor day in day out, and these costs can’t always be passed on to the customer. Over recent years, manufacturers have needed to become leaner, and to be a success in what has been described as the ‘new norm’ it is more important than ever.

This can only be achieved through better purchasing strategies, staff training and development, and being guided by market sector experts – whether they are six sigma/lean practitioners, or sales experts, business leaders in our sector should not perceive it as a weakness to look for outside help.

Innovating

Each year our suppliers bring out new materials that can make a real difference to our customers. The key is which ones are going to make that difference, and how to ensure that you are not just passing on cost, for marginal improvements. This is a key skill, and we see it as an area that will continue to grow in importance.

Social media marketing

This post will be published, commented upon, and then tweeted, and possibly re-tweeted. It may appear on LinkedIn or Facebook. Suppliers and prospects may even start following us or get a greater understanding of our brand through this one viewpoint? Compared to manufacturers of lifestyle/consumer related products, my business (along with the rest of the B2B slice of the industry) are playing catch up by looking beyond traditional marketing platforms, and I do see this as a real shift in the business-business part of the sector in 2012.

Seizing on opportunities

In a challenging economic environment, there are always opportunities that present themselves. Whether it is a competitor going out of business, or an opportunity to collaborate with a supplier to bring a new product to market, seizing the moment and capitalising on it, will be critical.

In conclusion, 2012 will be a challenging year, but so was 2011, and like many other business leaders, it’s what keeps me even more acutely focused on how the business can be a success. The true test will be when the whole country is riding the Olympic wave in July, will we be on its crest – or will influences out of our control – ruin our party?

Paul Bennett is managing director of Fascia Graphics, a producer of graphic overlays and membrane keypads