Prosperous 2012 for local engineering, says finance expert

Date added: 26 January 2012

A leading West Midlands finance expert says 2012 could be a prosperous year for the local engineering sector – but only with the right advice.

Paul Heaven, Managing Director of Blue Sky Corporate Finance, has looked ahead to the coming year and provides his professional opinion to finditintheblackcountry…

Let’s start making 2012 a prosperous year, says Paul Heaven

"With Jaguar Land Rover set to more than double its output over the next 18 months, JCB geared up for a massive export growth drive and SAIC committed to huge investment into MG Motor amongst countless other opportunities, the Midlands region is well set for an economic renaissance built on the good old fashioned principle of manufacturing things. JLR has announced a swanky new £355m engine plant near Wolverhampton and an ongoing investment of £1.5 billion per annum in new product development. JCB have announced a new £31 million engine plant and SAIC are committed to an investment of more than £50 million in the MG Motor facility at Longbridge. All of this investment will spawn huge growth prospects for the region’s based Tier 1 and Tier 2 suppliers with the courage and vision to step up to the plate.

"A recent study, carried out by PWC and others, found that some 31 per cent of respondents cited the absence of affordable finance as one of the factors deterring UK advanced engineering suppliers from investing in the growth of their capacity. This is supported by recent Bank of England statistics showing that the level of bank lending to SMEs is at an all time historic low. This is despite the fact that Government-supported schemes to assist in the issue of access to finance for SMEs are being announced on almost a weekly basis. In addition to the Enterprise Finance Guarantee Scheme (EFGS) and its asset lending and export lending counterparts, the past couple of months alone have seen Government-backed schemes announced by Santander, Nat West and HSBC. This is in addition to Government-backed tax incentives for Business Angels, the Business Angel Co-Invest Fund and additional funding support for CDFIs and the Advanced Engineering Supply Chain Fund. In short, there are all sorts of reasons why a UK-based engineering company might not want to invest in growth but the availability of affordable finance is not one of them.

"Perhaps the most worrying research report that has emerged in the past month is a Department for Business, Innovation & Skills (BIS) report citing the finding that ‘only 9 per cent of SMEs seek external advice when applying for an overdraft, and 20 per cent in the case of a loan’. This is despite the fact that ‘four out of five financial decision-makers in SMEs have no formal training in finance’.

"When you enter the shark-infested waters of the finance market, the odds are stacked against you. National statistics indicate that less than 40 per cent of overdraft applicants, less than 30 per cent of loan applicants and less than 4 per cent of equity applicants secure the finance that they are seeking. The finance to support those with the courage to make investment is out there but applicants for that finance need expert help. They need to identify the right source of finance, they need help to present their case for that finance and they need help to negotiate the terms of that finance.

"The scene is set for a year that will see many new jobs created in the engineering sector during 2012. So let’s make sure that those jobs are created in the UK and better still, here in the Midlands, the very heart of the engineering sector."

Paul Heaven has more than 20 years’ general management experience and is by profession a qualified chartered accountant. He formed Blue Sky Corporate Finance to serve the needs of the small to medium sized enterprise sector. Paul is an expert in corporate finance, venture capital, private equity and asset lending and has extensive experience of acquisitions, disposals, floatation and fund raising. Paul is also a regular speaker at Corporate Finance events, a member of the West Midlands Regional Finance Forum and an expert on the funding sources available from equity, debt, grants and trade/asset finance. Paul was recently appointed as one of the eight new board members for the Birmingham and Solihull Local Enterprise Partnership (LEP) and a Mentor for the Entrepreneurs for the Future (e4f) programme.

For more information about finditintheblackcountry member Blue Sky Corporate Finance, which has offices in Birmingham, Bromsgrove and Dudley, visit www.blueskycf.com