Lincolnshire business resilient but still challenging, latest report shows

While businesses in Lincolnshire have reported continued improvement to trading conditions for the second quarter of the year, there are still a number of concerns, according to the latest economic survey.

The Quarterly Economic Survey (QES) studies Lincolnshire’s business economy every three months, to see how firms are coping throughout the year.

The report found that while businesses are still seeing improving trading conditions, their main concern is issues of supply and tight profit margins.

While domestic and overseas sales figures are much improved since those in 2009 and businesses have reported improved sales, the percentage is lower than last quarter.

Fewer local businesses in the exporting trade reported improved sales in overseas markets this quarter compared to last, which reflects the national challenges in exporting due to slow growth in markets.

Meanwhile in manufacturing, over half of businesses reported improved sales figures compared to almost a third of service sector businesses.

Though manufacturing also found more firms reporting worsening cash flow, with a small majority reporting improved profits in this quarter.

David Holt, Managing Director of BGB Engineering in Grantham, reflects this concern.

He said: “Sales figures have been increasing because people are now gaining more confidence in the market as it continues to improve and we move further away from the recession.

“Turnover is also now back to pre-recession levels and we have invested a high amount in growth including new CNC machinery, an extension, significant improvements to existing buildings and we have been involved in more exports.

“However, margins continue to stay the same and decrease as there is currently a high level of competition which is resulting in us having to drop our prices to keep the demand up.”

Strong resilience

Despite these concerns, Councillor Colin Davie, Executive Member for Economic Development at Lincolnshire County Council, feel businesses are still fighting the challenges well.

He said: “Despite the worst recession in decades Lincolnshire businesses have shown strong resilience from its worst effects. And now the recovery is fully underway it’s clear the county is well placed to move forward with optimism.

“We’ll continue to work with our partners to make sure Lincolnshire remains a place where business happens.”

Simon Beardsley, Chief Executive at Lincolnshire Chamber of Commerce said: “The latest results suggest that business confidence across Lincolnshire remains high. We’re expecting overseas trading conditions to improve later in the year, but the positive headlines for the domestic market run alongside new concerns.

“Despite over a fifth of QES respondents saying that they planned to increase their workforce last quarter, many told us that that they face significant challenges finding skilled labourers to keep up with demand.

“While the current skills shortage may help the short term bargaining power for workers with the right skills, it also poses a risk to the momentum of economic growth when businesses that want to recruit more skilled staff find that they can’t, or that the cost to do so has significantly increased.”

David Mather, Economic Development Manager at South Kesteven District Council added: “The unemployment rate has fallen so the pool of people searching has got smaller, and the skillset of those searching are not always quite right for the workplace.

“Since the recession hit, businesses did not want to put money aside for training or investment as margins were tight. However, I think the situation will improve, businesses are becoming more positive as the economy stabilises and new opportunities are appearing.”