Further warning signs for the sector have emerged – for example, the level of bad debt owed by the sector to its suppliers. Bad debt of this type totalled £98.5m between July and September this year, a staggering 206.3% increase when compared to last quarter. This significant increase can be attributed in part to the bad debt left by Flow Group UK after the firm become insolvent earlier this year, while the number of companies across the industry carrying bad debt also increased by 36.5% to 3,967.
A total of 430 failures were recorded across the industry in Q3 2018, a 51.4% rise from the same period the year before. The most high-profile failure from the previous quarter was the collapse of the Force India Formula One team, with the company recently revealing it expects to pay all its creditors in full after its assets were sold to fashion tycoon Lawrence Stroll for £90m.
The fastest growing UK companies from the last three months include manufacturing giant Tata Steel, along with household names Ford and Dyson, with founder Sir James Dyson reportedly expected to receive dividends this year of more than £200 m.
In other good news for the Manufacturing industry, the number of County Court Judgments (CCJs), which indicates the extent to which companies are struggling to pay their bills, fell by 6.9% to 1,263 between quarters.
Chris Robertson, UK CEO at Creditsafe, said: “The figures recorded from last quarter are troubling for the UK’s Manufacturing sector, with accumulated sales flat-lining and the number of company failures recorded increasing at an alarming rate.
“With Jaguar Land Rover planning a two week shutdown of its Solihull plant at the end of October as a result of weakening global demand, and Nissan expressing concerns over a potential hard Brexit, further bad news could be on the horizon for the industry.”
Creditsafe’s Watchdog report tracks quarterly economic developments across Manufacturing and 11 other sectors (Banking & Financial, Farming & Agriculture, Hospitality, IT, Construction, Professional Services, Retail, Sport & Entertainment, Transport, Utilities and Wholesale).