UK High Tech Manufacturers Stay Confident Amidst Eurozone Crisis

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UK High Tech Manufacturers Stay Confident Amidst Eurozone Crisis PR Newswire LONDON, July 16, 2012 LONDON, July 16, 2012 /PRNewswire/ -- Uncertainty over UK economic outlook remains Focus shifting to opportunities in new & emerging markets Ability to hire experienced engineers still an issue The UK high tech manufacturing sector is still cautiously optimistic about its future, despite a largely undecided outlook on the general economy and amidst growing uncertainty in the Eurozone, according to a new survey. 77% of the 402 high tech manufacturers questioned for the fourth wave of the GE High Tech Index in June 2012 said that they felt either very positive (31%) or fairly positive (46%) about the current performance of their own business. This represents a slight improvement in sentiment since the last high tech survey in December 2011 when 73% of those questioned indicated they were either very positive or fairly positive about their own business prospects. Nearly half of the high tech manufacturers questioned said the Eurozone crisis was leading them to focus more new business efforts on developing markets, while 42% of said the Eurozone crisis meant they were also placing more attention and effort on the UK market.

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UK High Tech Manufacturers Stay Confident
Amidst Eurozone Crisis
LPOR NNDeOwNs,w Jiurley 16, 2012

LONDON
,
July 16, 2012
/PRNewswire/ --
Uncertainty over UK economic outlook remains
Focus shifting to opportunities in new & emerging markets
Ability to hire experienced engineers still an issue
The UK high tech manufacturing sector is still cautiously optimistic about its
future, despite a largely undecided outlook on the general economy and amidst
growing uncertainty in the Eurozone, according to a new survey.
77% of the 402 high tech manufacturers questioned for the fourth wave of the
GE High Tech Index in
June 2012
said that they felt either very positive (31%) or
fairly positive (46%) about the current performance of their own business. This
represents a slight improvement in sentiment since the last high tech survey in
December 2011
when 73% of those questioned indicated they were either very
positive or fairly positive about their own business prospects.
Nearly half of the high tech manufacturers questioned said the Eurozone crisis
was leading them to focus more new business efforts on developing markets,
while 42% of said the Eurozone crisis meant they were also placing more
attention and effort on the UK market.
Engineering skills shortages were also highlighted in the survey with almost
two-thirds (65%) of those who had been recruiting engineers over the last 12
months saying that they had had difficulty recruiting the right engineering staff,
particularly for mid-level or senior positions. Many businesses are focusing on
retraining existing employees or new recruits as a way to plug skills gaps.

Future prospects and UK economy

In terms of future prospects there was significant optimism. 68% of those high
tech manufacturers questioned said they expected the performance of their
business to either be a lot better (18%) or a little better (50%) in the next year
while just 8% expect conditions to worsen.
However, the high tech manufacturers questioned were less optimistic about
the UK economy in general - though more positive about the general economic
outlook than in
December 2011
when confidence in the general economy
amongst those surveyed was very low. In the latest survey 25% of those
questioned said they were either very positive (6%) or fairly positive (19%)
about the current economic situation with 73% saying they had either a neutral
(39%) or negative (34%) outlook. In the previous
December 2011
just 4% said
they were very positive about economic conditions and 11% saying they were
fairly positive.
Over the next 12 months, the net percentage of respondents expecting to see
the UK economy improve is 2%, but the figure for conditions for UK High Tech
manufacturing is 30%. Those who think the performance of their own business
will get better are even higher, at a net score of 60%. Reasons for this are cited

will get better are even higher, at a net score of 60%. Reasons for this are cited
as increased exports (23%), more customer inquiries, orders or new business
(18%), and new products or research and development (16%).
Compared to figures in previous surveys, 69% of respondents expect their
business to grow in 2012 - over a quarter (26%) by over 10%. Only 8%
expected their business to shrink in 2012, compared to 2011. There is a clear
trend that the majority of respondents perceive the current market and
business environment to be improving when compared to the situation last
.raeyGE

UK

CEO Mark Elborne commented:

"UK high tech manufacturers are
showing extraordinary determination and resilience in the face of uncertain
economic times in the general economy. The survey suggests that the
Eurozone crisis has not had a major impact on their businesses so far, but it
also highlights the measures they are taking

-

such as focussing on emerging
markets, and sourcing materials from the UK, to ensure that they are able to
weather the storm."

Influence of Events

A number of events and circumstances in the first half of 2012 have had an
impact on the business environment. Respondents to the survey cited high raw
material costs (76%), rising energy costs (66%), and uncertainty in the
Eurozone (55%) as the most critical factors with a negative impact.
Conversely, the continued strong growth rates in many emerging economies
(40%), low UK interest rates (39%), and the value of sterling (28%), were cited
as positive influences on performance.
Nearly half of the high tech manufacturers questioned said the Eurozone crisis
was leading them to focus more new business efforts on developing markets,
while 42% of said the Eurozone crisis meant they were also placing more
attention and effort on the UK market.
More than a third also said they were approaching business in the Eurozone
with more caution. A third of those questioned said the Eurozone situation also
meant they were sourcing more materials locally in the UK.

Bank Funding

Access to bank funding remains an issue in the UK high tech manufacturing
sector, only 16% of respondents feel that bank funding is plentiful or readily
available, with 9% believing that it is impossible to obtain. 16% feel it is
available but on unacceptably onerous terms, and 28% feel that it is available
but on fairly onerous terms.

Employment/Skills

The positive outlook shown by many of the respondents on the sector is
reflected in the number of businesses looking to increase staffing levels over
the next 12 months. Over half of respondents (54%) said they would be looking
at doing this - though of these respondents 74% said they would only be
increasing levels by 1-10%.
Significantly, almost two-thirds (65%) of those who had been recruiting
engineers over the last 12 months said that they had had difficulty recruiting
the right engineering staff. The most difficulty when hiring engineers was found

when filling either mid-level or senior positions.
Mid-level engineers (defined as those with 5-10 years' experience), are posing
the greatest problem with 90% for whom it was relevant finding it difficult to
recruit at this level. Across specialisms, mechanical engineers (29%), electrical
engineers (25%) and general engineers (21%) were the most difficult to recruit.
According to the survey UK high tech manufacturers are taking several
different approaches to address the current engineering skills shortage. 71% of
businesses are retraining existing employees, 56% are encouraging
apprenticeships and 53% are retraining new hires. Only 39% of businesses are
paying higher wages to overcome the shortage.
Promoting engineering is overwhelmingly the most popular choice for
improving the skills shortage - 94% of respondents believe that this would have
a positive effect, with 86% supporting an increase in science and maths
education in schools.
Mark Elborne added:
"
To make sure that the high tech manufacturing
industry remains a leading player in the development of the UK's economy, we
must provide the right business conditions for this sector to continue to grow.
This includes providing better access to finance and promoting engineering as a
successful career choice to the next generation."

Survey Details:

Every six months, GE undertakes a survey of senior executives working in the
UK High Tech manufacturing sector. The first survey took place in Winter 2010,
and was repeated in Summer 2011, and in Winter 2011. This report provides
an update into the state of the sector six months later.
ORB International conducted a survey of 402 senior decision makers in UK High
Tech businesses between 31st May and
15th June 2012
. All businesses had at
least 10 employees, and they were defined as High Tech on the basis that they:
To at least some degree "use a high level of design or scientific skills to produce
technologically complex products and processes - usually of a high value";
Are a primary manufacturer of components, equipment or products rather than an
assembler of components that are sourced entirely from external suppliers;
Are characterised by at least three of the following attributes:
Has a highly skilled workforce
Produces technically complex (Hi-Tech) products
Uses advanced, innovative or cutting-edge technology to produce its products
Produces products with a high added-value
Utilises a high level of design, innovation or creativity
Makes extensive use of computer, high-precision and information technologies
Engages in a large amount of Research & Development (R&D)
Has high levels of productivity i.e. not necessarily high volume but efficient
production processes / high value of output per employee etc
Provides consultancy and/ or advisory services in relation to its products

The research was conducted over the telephone, using computer-aided
telephone interviewing (CATI) methodology. Respondents included175
companies that had participated in previous waves of this survey in addition to
277 newly recruited respondents.

Companies questioned manufactured a wide range of hi-tech components and
products - for example, medical instruments and devices, laser optics, industrial
sensing equipment, specialis