The West of England’s small and medium-sized firms are leading the UK for job creation with more than two thirds planning to recruit more staff and SME manufacturers are committed to investing in their workforce over the next 12 months, according to two new surveys.
The upbeat findings, from the latest HSBC Commercial Banking survey and Manufacturing Barometer, reveals that the region’s SMEs are very optimistic about growth and are looking to take on skilled, permanent staff to support their increased activity. 
Some 68% expect to hire staff in the coming year with 59% of them saying that permanent, skilled staff will benefit the growth of their firm more than agency or casual staff.
Just over half (52%) expect their turnover to increase over the next 12 months with more than a third expecting at least 6% growth. Almost one in 10 expect turnover growth of more than 20% and only 11% expect turnover to fall over the coming year
HSBC head of business banking in the South West, Nigel Davis, said: “This survey shows that small and medium-sized businesses in the South West are not only positive about growth, they are more likely to hire full-time staff to help them grow than any other region.
“Hiring and training skilled staff takes investment – which is why HSBC has committed £600m to lend to SMEs in the South West this year and why we are running ‘Strategies for Growth’ workshops to help businesses realise their ambitions.”
The Manufacturing Barometer reveals that nearly two thirds (64%) of respondents have outlined plans to increase spending on developing their staff during the next year in a bid to unlock the ‘productivity puzzle’ - the much talked about discrepancy between the improvement in UK economic performance and falling output per hour worked. 
This investment in people is seen as more of a priority for achieving productivity gains than increasing spend on machinery and capital equipment (59%), and implementing new computer software & systems (49%).
Simon Howes, director of South West Manufacturing at the Business Growth Service – which produces the Manufacturing Barometer – commented: “Productivity continues to dominate the news agenda, with the UK reported to be lagging behind many of our European counterparts.
“At times like this many businesses look to gain improvements through tools and techniques such as lean manufacturing and Six Sigma, but this should not be approached with ‘quick wins’ in mind. We encourage businesses to take a deeper view by addressing the need to change the company culture, improve morale and build the capacity for change and growth.
“It’s a combination of these two approaches, addressing both people and processes in equal measure, which will deliver enhanced performance and sustained continuous improvement. We know that improved productivity creates increased capacity, leading to new opportunities and growth and internal measures need to be aligned to this and not to short term wins.”
The Manufacturing Barometer findings also reinforce recent economic reports highlighting a general softening in the marketplace. While over half (56%) of businesses expect their sales turnover to increase in the next six months, this is a fall from 68% in the last quarter. Appetite for investment has also slowed, with 44% of manufacturers expecting to increase spend on new machinery or premises in the next half year, compared to 59% last quarter.
Simon Howes added: “Volatility among Chinese financial markets and the uncertainty surrounding Greece’s future in the EU, coupled with falling oil prices and exchange rate fluctuations, have all had an impact on economic growth in the UK in recent weeks and months. This uncertainty filters down the manufacturing supply chain and may affect the confidence of SMEs as well as meaning orders take longer to materialise.
“This is where our Business Growth Managers play an important role, helping firms on the ground with scenario planning to ensure they are in the best position to diversify and capitalise when market confidence returns.”
The Business Growth Service helps businesses with the right level of ambition, capability and capacity to improve and grow. It brings together a broad range of expertise so that businesses can get the right advice and support to fulfil their growth potential.
The service includes support from GrowthAccelerator, the Manufacturing Advisory Service, design mentoring from the Design Council and intellectual property audits from the Intellectual Property Office.
It also refers SME manufacturers to the right support provided by other agencies, including UK Trade & Investment, Innovate UK (including High Value Manufacturing Catapults), the British Business Bank, local Growth Hubs and UK Export Finance.
