Banks still keeping a tight hold on their cash
Companies are being hampered in their efforts to grow by a direct lack of lending says Simon Griffiths
The recent upturn in fortunes of the banking sector has not translated into the expected and required funding for manufacturing growth.
Despite the widespread announcements of a return to profit from the banks, little benefit is being felt by the manufacturing sector according to Simon Griffiths. head of the Manufacturing Advisory Service – West Midlands..
Working with companies across the region every day, he says that businesses are still facing major difficulties in accessing finance.
“While it is very good to hear the banking industry is slowly finding its feet, we are still receiving regular feedback from companies that are being hampered in their efforts to grow by a direct lack of lending,“ he said.
“Given that just about every indicator out there shows us emerging from the downturn this just seems plain nonsense, but this is what we are hearing loud and clear.”
Mr Griffiths explained that although accessing finance from the banks was a challenge, there was a great deal more that could be done on both sides to encourage lending and investment in new products, processes and services.
“I have visited numerous manufacturers in our region and those making strides forward are those that know exactly where they want to go and have put time into the three P’s – Product’s, Processes and People.
“Generally, these firms have embraced leading-edge technology for their production equipment and upskilled their employees to maximise the benefit of this technology. More often than not, there is either a unique or innovative product they can offer their customers and for which a premium price can be demanded.
“The identification of the unique selling point by companies is vital to showing the viability of both product and business and the preparation of a robust plan that then justifies investment.
“It’s here really where I think banks and businesses could be more joined up. If the money is there to be loaned, the business case is right and there is confidence in management, then it should be a win-win for both parties.
Simon singled out the need for communication between banks and businesses to be better to help each understand the other’s needs.
He concluded: “Beyond that the re-introduction of local business bank managers, although controversial, could be of real benefit. In the days of a local manager he or she had such good working relationships with their customers and could spot a winner when one came along.”
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