South west manufacturers and engineers continue to be optimistic of their future growth prospects, but Brexit is having an impact on recruitment, according to a new survey from MHA and Lloyds Bank Commercial Banking.

Leading the survey for the south west, MHA member firm and regional representative Monahans has spoken to businesses to put together a snapshot of the trends and challenges the sector is facing.

This year’s results show that nationally skills shortages remain a major concern to businesses, with 20 per cent of firms saying that they either have lost, or are at risk of losing staff as a direct result of Brexit, mainly due to the uncertainty over workers’ rights.

Across the south west, manufacturers are reporting positive economic development in the past year with 66 per cent of respondents reporting growth – and 27 per cent reporting very encouraging growth levels of 10 per cent or more.

Optimism remains high - with 80 per cent of businesses anticipating revenue growth in the coming year from increased demand and the expansion of their product ranges.

Research and development expenditure lags behind the national survey averages with only 29 per cent - compared to 47 per cent nationally - investing between one and and six per cent of their turnover on the next generation of products and process.

Only 13 per cent of businesses in the south west area report that they do not invest anything in R&D, but there is work to be done in raising awareness of the R&D tax credit regime as 44 per cent of businesses have not made a claim in the last 12 months.

Iain Black, the manufacturing partner at Monahans, said: “It is very encouraging to see the positive forecast continue for the manufacturing industry.

“Recruiting and retaining skilled workers remains an issue, not helped by Brexit. Businesses could be in a stronger position should they access funding available to them, which good business advice and accountancy support could help with.”

This was also reflected in the level of businesses which knew about or had accessed other grants or government funding available to them, with only 25 per cent doing so.

Short and longer term, business confidence remains high and in line with national trends, but getting the right skills continue to represent a barrier to growth for 30% of business.

Similar to the national picture, the skills agenda remains a priority for businesses in our region, with 63% reporting that they plan to increase staff numbers, which is 6% above the national indicator. Locally, only 10% of businesses expect to lose staff because of Brexit, giving us a more optimistic outlook than the national picture.

Recruiting staff with relevant skills remains an issue, with experienced engineers, skilled machinists/technicians and production staff continuing to be the most difficult to find. A lack of local motivated lower skilled candidates has also arisen as a consistent regional and national issue.

Encouragingly, 60% of local respondents are planning to take on apprentices, which is following national trends.

Overall respondents in our region face similar issues to the national picture, where optimism remains high but is tempered by concerns over Brexit.

David Beaumont, regional director for SME banking in Lloyds Bank Commercial Banking in the South West, said: “The report paints a fascinating picture of the South West economy. While growth prospects look bright in the wake of Brexit negotiations, with eight in ten firms expecting to see revenue growth over the next 12 months, recruiting skilled workers is still a struggle for many local firms.

“The South West has a rich history in aerospace, automotive and rail sectors to name just three and these are helping to drive the local economy. The manufacturing sector faces challenges but is in good health and we continue to support the sector as part of our Helping Britain Prosper commitment.”

To read the full report, visit