The performance of the SME manufacturing industry varies widely. For instance, maintenance and service companies as well as engineering and consultancy organisations present above average. In contrast, machine builders score worse than average.
This is according to the Royal Metal Union Economic Barometer for the second quarter of this year. On average, the Stand of the SME manufacturing industry - the balance of all positive and negative answers to the questions of the Economic Barometer - at the end of Q2 is equal to the long-term average of the Economic Barometer.
Orders from home broadly flat
In terms of orders from home, hardly any growth is visible compared to Q1. For instance, in a quarter of the companies, the number of domestic orders increased, while in an equally large group it decreased. At half, no change was visible. Machine builders and, in particular, machining companies saw their order positions decline more sharply in Q2 than on average in the SME manufacturing industry.
At the same time, the rating of the order position domestically has increased by 18% over the past six months. Koninklijke Metaalunie reports that 37% of companies are satisfied with the domestic order position, while 19% are not.
Expectations for the third quarter are considerably more positive than in recent years. For instance, over a third expect an increase in the domestic order position in the third quarter. The average order backlog in weeks increased in Q2 compared to Q1 and now stands at 11.8 weeks. This is almost a week more than at the end of Q1.
More exports
The order position abroad also increased rather than decreased for the first time again among more respondents. For instance, 35% of exporting companies report that their portfolio has grown. A quarter reported that it actually decreased. Sheet metal workers are above average in this respect.
44% of respondents reported exporting this quarter. Of those exporting, 6% to 10% of their turnover is reported to come from exports. Among the remaining 38%, the average is 46%. More entrepreneurs are positive about their export position. For instance, 35% report being satisfied, while 23% report being dissatisfied. The latter group includes relatively many machine builders, reports Metaalunie.
Expectations regarding orders from abroad are positive. For example, 34% expect to win more orders, while 16% expect fewer orders from abroad. Remarkably, machine builders are most positive about the next quarter.
Higher prices
SME manufacturing companies' prices are rising. For instance, 22% of companies reported having increased the selling price in Q2. 8% correctly reduced prices.
Companies are also attracting more staff. On average, SME manufacturing companies employ 19 staff. Of these, 16.8 FTE on average have a permanent contract, while 2.2 FTE have a flexible contract. In percentage terms, this means that 12% of employees have a flexible contract.
Fewer permanent staff and more vacancies
Looking at the entire SME manufacturing industry, the amount of permanent staff fell by 6% in Q2 compared to Q1. On the contrary, 11% of organisations employed more employees on permanent contracts. On balance, this represents an increase of 5%.
The number of vacancies is also on the rise. While some quarters the number of vacancies actually declined, the number actually increased in the first half of 2024. At the end of 2023, 44% of respondents had at least one vacancy outstanding. This is now true for 54% of companies. On average, there have been 2 to 2.5 vacancies open per company for some time, which rose to 2.8 in Q2.
More profit
The profitability of SME manufacturing companies is on the rise. For instance, two-thirds report making a profit, while 10% make a loss. The remaining 22% are breaking even. The trend in operating profit also improved in Q2 compared to Q1. In Q1, operating profit declined at 11% of companies on balance. In Q2, operating profit on balance is actually increasing at 2% of companies.
This is also reflected in entrepreneurs' appreciation of their business results. For instance, 36% of the SME manufacturing companies surveyed are positive about their operating result, compared to 28% at the end of Q1.
Operating result expectations for the third quarter are slightly more positive. 29% expect business results to improve, while 16% expect worse business results.
Further information is available here.
Author: Wouter Hoeffnagel
Image: X3 via Pixabay
