Business

Insolvency body reveals decreased risk for north's manufacturing sector

The latest R3 research show a decreased risk of insolvency for Northern Ireland businesses
The latest R3 research show a decreased risk of insolvency for Northern Ireland businesses The latest R3 research show a decreased risk of insolvency for Northern Ireland businesses

NORTHERN Ireland's troubled manufacturing sector will be bolstered by new research showing a drop of 4.1 per cent in the proportion of businesses at heightened risk of insolvency.

Insolvency trade body, R3, has reported 20.6 per cent of the north's manufacturing businesses now at a higher-than-normal risk - compared to 22.4 per cent across the UK .

Additionally, the proportion of all businesses at high risk in May is 7.2 per cent lower than at the same time last year.

Michael Neill, chair of R3 in Northern Ireland and partner at A&L Goodbody Belfast, said the north's manufacturing sector had put in a "strong performance" during the last year.

"This month’s results in particular are a positive indicator of the current financial stability of the sector," he said.

"Manufacturing has always played an important role in Northern Ireland’s economy and it continues to show resilience.

"Of the key sectors tracked, it has one of the lowest levels of insolvency risk and is out-performing many of its regional counterparts across the UK."

And while many manufacturing businesses may be apprehensive about 'Brexit' and the possible implications for future investment and exporting opportunities, he said it was "good to see that uncertainty hasn't translated into elevated levels of risk".

He added: "For the time being, businesses should stay focused on their current business plan and on maintaining cash-flow.

"A number of recent high-profile job loss announcements are disappointing but shouldn’t be cause for undue concern. As the economy continues to grow, the industry is well placed to capitalise.

"Agriculture regularly displays the lowest level of insolvency risk, but it’s also encouraging to see transport and haulage companies in good financial health. Falling oil prices will undoubtedly be helping businesses to keep costs down."

Manufacturing was among the three sectors with the lowest risk of insolvency in Northern Ireland, behind only agriculture (19.7 per cent) and transport/haulage (20.35 per cent).

The figures are from R3’s latest insolvency risk tracker which is compiled using Bureau van Dijk’s ‘Fame’ database, measuring the proportion of businesses across selected sectors which have a heightened risk of entering insolvency in the next year.

R3's assessment is a more optimistic interpretation of the state of manufacturing than that contained in a recent economic forecast by Danske Bank which predicted a 1.4 per cent growth for the sector this year and consigned to the 'worst performing' category.

In its forecast the bank said the sectors expected to show the highest rates of growth were administration and support services (5.1 per cent), professional and scientific services (4.5 per cent) ICT (3.2 per cent ) and hospitality (3.2 per cent).

Manufacturing, meanwhile, was placed at the other end of the scale along with health (1.4 per cent), construction (1.4 per cent) and agriculture (1.2 per cent).