A recent report shows SME manufacturers have strong expectations for the year ahead, although they feel pressures more keenly than other industries.
Although facing headwinds from a high dollar and falling international demand, Australia’s SME manufacturing sector has experienced some of the highest levels of revenue growth in the last 12 months, according to accounting-software provider MYOB.
In the September 2014 MYOB Business Monitor Report, 29% of SME manufacturing and wholesale business operators reported rising revenue in the 12 months to August 2014, compared to 21% of SME businesses overall. Businesses in the sector made up 8% of the national research sample.
The figures show a significant turnaround in the last six months, with the proportion of businesses seeing revenue decline falling from 43% in the March Monitor to 32% in the latest survey.
A significant turnaround in the last six months shows the proportion of businesses seeing revenue decline falling from 43% to 32%.
Manufacturing and wholesale business operators are also more confident about the wider economy, with 31% expecting the economy to improve in the next year (24% overall).
Some of the sector’s revenue gains are expected to come in the next quarter, with 38% of the industry saying they are seeing more orders in the next three months, while 23% report that their quarterly work pipeline is reduced.
‘Manufacturing is one of the key industries in our economy,’ says MYOB CEO Tim Reed. ‘Over recent years, it has struggled with a broad range of factors, from a dollar reaching record highs, to a rapid drop-off in demand from some of our key trading partners.
‘It’s extremely pleasing, therefore, to see the sector turning a corner in this latest Business Monitor survey – demonstrating both the resilience and the productivity gains seen in the sector.’
Pressures felt more keenly
The growth in the industry, however, could be under threat from a wide range of pressures, felt far more strongly in the sector than in other industries.
Attracting new customers, price margins and the cost of fuel all feature highly as pressures the sector will have to combat in the 12 months to August 2015.
Top pressures for the manufacturing/wholesale sector
1. Attracting new customers – 47% (32% for all SMEs)
2. Price margins – 39% (28% for all SMEs
3. Fuel prices – 39% (33% for all SMEs)
4. Timing of customer payments – 38% (27% for all SMEs)
5. Competitive activity – 37% (26% for all SMEs)
‘The industry is on the turnaround – but that growth is still fragile,’ Reed says.
‘What will be important for business operators in the next year is focusing on reducing those pressures by streamlining systems and practices, while using technology to provide the competitive edge – especially in areas like customer attraction.
‘For the businesses and agencies that support the sector, your help will be needed in finding ways to help make it easier for manufacturers and wholesalers to succeed, both locally and internationally, in 2015.’
