Sharp rise in manufacturer insolvencies expected

by Gill Montia

Story link: Sharp rise in manufacturer insolvencies expected

BDO Stoy Hayward is forecasting a sharp rise in the number of UK manufacturing firms that have failed. The accountancy firm and business advisor expects a 37% rise on 2007 figures.

In its Manufacturing Industry Watch report, BDO puts the number of manufacturing failures this year at 1,841 up from 1,341 during 2007.

The firm’s head of manufacturing, Tom Lawtonat, says the research illustrates the recent dramatic declines in manufacturing activity in the UK and indicates that many manufacturing companies are entering a period of severe pressure.

He believes that the key to surviving these tough economic conditions will be optimising cash reserves and that all possible means should be used to address this but most particularly inventory reduction.

The report goes on to predict that 2,413 manufacturers will fail in 2009, up 31% on the 2008 estimate.

It concludes that insolvencies in the manufacturing sector are likely to stay at this high level throughout 2010.