Welcome to the Myerson Solicitors Manufacturing Q&A with MHA Moore and Smalley, an independent accounting and wealth management firm based across the North West.
We delve into various aspects of the manufacturing sector and its challenges in the current economic climate.
From rising material and energy costs to skills shortages and the impact of technology, we explore the strategies implemented by businesses to remain competitive whilst navigating through uncertain times.
With a focus on customer support and best practices in financial management, we talk to Ginni Cooper, Head of the Manufacturing and Engineering team at MHA Moore and Smalley, to gain insights into the manufacturing industry and how clients are looking towards the future.
1. What manufacturing industry/sector trends are you seeing?
Manufacturing businesses are particularly impacted by rises in material and energy costs, delays in deliveries and through ports, and the increased paperwork that they now face.
These challenges present an opportunity for businesses to consider onshoring as a way of controlling both costs, speed of delivery and product quality.
The introduction of freeports could prove to be one possible opportunity to address these challenges. Freeports are a means of energising and stimulating internal economic activity, such as trade, investment, and the creation of jobs in geographical areas that are located close to shipping ports and airports. As an incentive, these areas are then able to claim certain tax exemptions.
2. How has your business been affected by the current economic climate?
There have certainly been some challenges that we have overcome as an organisation, but our business continues to remain exceptionally busy, and we have not only ridden the storm but grown during this period, with recruitment across all divisions of MHA Moore and Smalley continuing at pace.
We are fortunate that we look after a large number of high-profile, successful businesses, which has allowed the firm the luxury of stability and growth during this turbulent period of time.
Clearly, not everyone has been so fortunate, and the economic climate is still quite unclear, but from our perspective, we do not appear to have seen many clients facing any sort of insolvency or intervention.
Clearly, an indicator that we are looking after strong businesses.
3. What strategies have you implemented to remain competitive during these uncertain times?
Our approach has been to remain close to our clients, ensuring that we are tuned into their needs and that our content is relevant to each specific client and sector.
We consider ourselves to be a proactive firm, and every contact and interaction should add value, be this through events or technical updates and information seminars.
Working with Partners like Myerson has also enabled us to provide additional third-party support and material to our clients that may prove helpful for their future business strategy.
4. How do you anticipate the economy to evolve over the next few years?
We have some clients doing some very interesting things with a clear, unique proposition in the wake of the economic climate, which has proven to be successful and continues to be successful.
We should therefore start to see some growth within the economy, albeit in smaller rates.
For example, we have a number of clients within the manufacturing sector that have diversified their products to take advantage of changing consumer habits as a result of both the COVID-19 pandemic and the cost-of-living crisis.
This agility has enabled them to remain competitive and stand them in good stead to manage future challenges that they may face.
We do anticipate, however, that the economic climate will remain tough in the short term, and we are working with our clients to ensure they have up-to-date financial information in order to make informed and timely decisions.
5. How are you seeing your sector clients, such as Manufacturing, affected by the current economic climate?
Faced with the challenges that I talked about earlier, manufacturing businesses are being faced with ever-increasing input costs.
Whilst initially, they may have been able to pass some or all of these increases on to the customer, there comes a point in time when further increases may not be feasible.
Our business owners are then faced with the challenge of deciding which costs they may be able to absorb, possibly affecting margin, and which must be passed on, perhaps affecting client relationships.
In addition, they are being faced with skills shortages and wage increases – just like many other sectors right now, there is pressure on wages to attract and retain staff.
Post-COVID-19, we are seeing a skills shortage in certain areas of the market, with experienced people leaving the workforce to be replaced by young, ambitious workers who do not yet have the years of experience that have been lost.
6. What impact do you anticipate technology will have on your client's business operations in 2023?
As we are seeing quite a lot now with the rapid growth of technology such as AI and robotics, we may well find ourselves in a position where businesses will look towards modern technology as a potential solution to plug the shortages in skills in the workplace.
For example, advancements in technology are now playing a vital role in the development of our client's businesses.
For some clients, an intuitive accounting system can help to automate some traditionally manual processes, thereby saving time and decreasing the likelihood of error.
AI and robotics can significantly improve the production process on the shop floor, ensuring the same speed and quality of output is achieved time after time.
In light of the skills shortage in the manufacturing sector, we are seeing clients embrace technology as a solution to plug the gap.
7. What main challenges have you or your clients faced in the past year?
As I have touched on, attraction and the retention of staff is becoming more of a challenge and part of our responsibility to our clients is to look at how we can help support these businesses.
One option that firms are starting to explore is the introduction of an Employee Ownership Trust (EOT).
An EOT is a trust that enables a company to become owned by the very employees who work there and can be created by the company's present owners.
This is a tax-efficient employee benefit with many incentives – in particular, the desirability that employees find by having a stake in the business for which they work.
An EOT is typically introduced by owners as part of an exit strategy or by founders of a new business who, as they start to establish themselves, look at how they can become employee owned.
8. What steps should manufacturing businesses consider?
With all the pitfalls and challenges that we have talked about facing the manufacturing sector, my advice to these businesses in order to alleviate these challenges would be to try to become more efficient, very importantly they should look at what they are doing to stand out and be an attractive employer to potential new employees.
Right now, we are seeing great interest in businesses with a strong Environmental, Social and Governance (ESG) and certified B corporations. In summary, with the climate emergency looming, prospective recruits are now paying particular attention to firms who meet very high standards of social and environmental responsibility – This is something that MHA Moore and Smalley also take extremely seriously, and as a firm, we recently shared our own ESG impact report.
9. What are the best practices for managing financial records for your clients
There are two simple yet key practices that all companies, not just our clients, should implement.
That is to ensure that their financial records are kept up to date and that they invest wisely in a good financial team or financial advisor.
10. What are the benefits of outsourcing accounting tasks?
Finances and remaining on top of your finances can be complicated and time-consuming.
By investing in outsourcing accountancy tasks to a professional financial services practice such as MHA Moore and Smalley, it allows business owners the freedom to concentrate on their business, safe in the knowledge that their financial and accountancy needs are in safe hands, with the reassurance that everything will be done correctly, on time and in line with relevant guidance and banking covenants.
11. How can I identify and mitigate risks associated with investing in a new business venture?
Research is key. Before entering any new market, service, or service line, you must do your market research first.
This must include thorough, in-depth research on financial and legal due diligence.
12. What kind of customer support do you provide to clients in the manufacturing sector?
At MHA Moore and Smalley, we pride ourselves on the level of support and variety of this support that we can offer our clients.
This can include the different services that we provide, such as tax and research and development (R&D).
With our practice being the size that it is, we are able to offer a full tax, audit, and advisory service – our manufacturing clients will also benefit from financial planning, payroll services and, as I have mentioned, tax and R&D.
We are also very well connected in the marketplace with sector-specific intermediaries and trade bodies.
Coupled with being members of Baker Tilley International, we can also help clients based overseas or wishing to trade overseas.
We also run special events for businesses within the sector and are able to help with customs and duties through our specialist teams.
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