Grappling with Investment Decisions

It is difficult to ignore the uncertainty that is Brexit, but the positive climate for making bold investment decisions is hard to deny.

A reduction in corporation tax rates to 17% from April 2020, increased Annual Investment Allowance to £1m until December 2020 and the improved availability of cash from banks, all provide a healthy environment for manufacturing and engineering companies to make key decisions about investment, structure, acquisitions and productivity.

Manufacturing in the UK is going through a rough patch now, particularly in the automotive sector, with the closure of the Honda plant in Swindon and the Ford plant in Bridgend.

Key decision-makers in business are faced with difficult choices about how to respond.

Is a focus on modernising equipment, updating IT infrastructure and shifting into more digital manufacturing and supply chain management the right one? Or is investing in the workforce to fill the skill gaps priority number one? Additionally, there is the option of looking at expansion through an acquisition or merger or returning wealth to shareholders.

Whatever business owners decide, it needs to be well thought through and strategic.

Some key points for consideration:

  • Has the increase in available cash from lower tax rates and investment allowances been quantified?
  • What is the ability of the business to raise new finance for investment?
  • How should capital investment be prioritised, accelerated or increased?
  • Are suppliers, competitors and customers already making moves?
  • Is the acquisition of a competitor, or supplier now making more commercial sense, or is there an opportunity to diversify?
  • What are the expectations of the business owners and investors?

This article featured in issue 5 of our Manufacturing and Engineering newsletter series.

Read The Engine Issue 5

For further advice or if you have any concerns about investment decisions for your business, please get in touch with a member of our Manufacturing and Engineering team.