‘Firms must be lean and mean’

10:55am Wednesday 3rd May 2006

MANUFACTURERS across Wiltshire are being advised to adopt lean manufacturing before increasing prices to combat rising raw materials costs, after figures from the Office of National Statistics showed UK manufacturers prices climbed last month.

Research found that the producer output price, which measures the price manufacturers charge for goods, rose by 0.3 per cent in March.

The South West Manufacturing Advisory Service, the DTI-funded troubleshooter that helps manufacturers across the region reduce waste, cut costs and increase profitability, said that manufacturers were "between a rock and a hard place", with increased prices potentially driving away customers and rising costs decreasing profits.

Arthur Richardson, director of the South West MAS, said: "With increasing global competition, particularly from the Far East, the opportunities for manufacturers to increase their prices to cover costs, while at the same time keeping their customers, are slim. However, those that don't increase prices are facing the prospect of eroding already tight profit margins and endangering their businesses.

"Manufacturers should consider the alternatives before putting prices up.

"By adopting lean techniques, manufacturers are showing customers that all necessary steps have been taken. If manufacturers have not reviewed the leanness of their operations, how can they justify price increases to customers?"

Since its launch, the South West MAS has provided more than 2,000 manufacturers with expert advice, hands-on support, training programmes, workshops and seminars, which have generated £14 million of added value across the region.

The organisation states that many more companies need to come forward in order to take advantage of this support.

"Knowledge-based manufacturing is the only way forward as manufacturers increasingly struggle to compete on price against overseas competitors who are operating in low wage economies," Mr Richardson said.

"With overheads, raw materials and energy prices at a record high, now is the time for manufacturers to take advantage of the subsidised support available to help them become leaner and secure a profitable future."