Subcontract manufacturing proves resilient

After a slack final quarter in 2017, the subcontract manufacturing market seems to be shrugging off concerns about Brexit

The value of the UK contract and subcontract market rose by nearly 11% in the first quarter of 2017 compared to the final quarter of 2016, according to the latest Qimtek Contract Manufacturing Index (CMI) figures.

The index for the first quarter of 2017 was 163, compared to 147 in the final quarter of 2016.

Growth has been steady but less dramatic year-on-year. In the first quarter of 2016 the index was 155, so the last 12 months have seen a rise in the index of just over 5%.

 

The base line figure of 100 represents the average value of the subcontracting market during 2014.

The CMI is produced by sourcing specialist Qimtek and reflects the total purchasing budget for outsourced manufacturing of companies looking to place business in any given month. This represents a sample of over 4,000 companies who could be placing business that together have a purchasing budget of more than £3bn and a supplier base of over 7,000 companies with a verified turnover in excess of £25bn.

Looking at the figures on a process-by-process basis, machining was strong in the first quarter of 2017 – up 15% on the final quarter of 2016. It was down by 8% though compared to a particularly strong period for machining in the first three months of 2016.

Fabrication more than held its own, up 13% on the previous quarter and 19% on the equivalent quarter last year.

To put the figures in context, machining accounted for 48% of the total business and fabrication for 36% of the total, with other processes, including electronics and plastic moulding, accounting for the remainder.

Commenting on the latest CMI figures, Karl Wigart, owner of Qimtek, said: “We are now in a position where business is better than it was before the Brexit vote. January was a very strong month for machining – as was January 2016 – and fabrication still seems to be making excellent progress. What the figures don’t show, but which is possibly significant, is that the value of individual orders has been higher than average over the quarter.”