Cornwall Quarterly Economic Survey 1st Quarter 2018 · This quarter (Q1 2018) Last year (Q1 2017)...

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Cornwall Quarterly Economic Survey1st Quarter 2018

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• Questionnaire specified and designed by British Chambers of Commerce

• 1st Quarter Economic Survey of 2018

• In Cornwall: Sample drawn from Chamber members and non-membership organisations 42nd survey for Cornwall Chamber 87 completed surveys overall. 78 respondents recruited using Chamber member

messaging (M2M newsletter and bespoke direct mail), and promotion throughCornwall Chamber Networking events. 9 members recruited via telephone followup interviewing.

Survey data submitted to the British Chambers of Commerce (BCC) within 24 hoursof the survey closing

13 non-members provided responses, of which 3 have requested further information about Cornwall Chamber

The Survey

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Business Confidence and Performance

• 33% of respondents say they are operating at full capacity, down from last quarter (48%), 59% operating below capacity (up from last quarter, 41%). The balance on expectation for change in turnover has decreased from 67% in Q4 2017 to 54% in Q1 2018 (i.e. those expecting an increase less those expecting a decrease). Expectation of profitability decreased, with the balance down from 47% to 39%.

• UK Sales have decreased (net balance of 16% compared to 46% in the last quarter) with a rise of those who have not seen a change by 7% from 34% in Q4 2017 to 41% in Q1 2018. 28% reported an increase in UK Orders/advanced bookings with the net balance of 12% compared to 36% in Q4 2018.)

• 30% of Q1 participants are exporting. About 35% of these (or 10% of all businesses) report increases in overseas sales this last quarter and 27% (or 8% of all businesses) report increases in advanced export orders. Then main export destination is the EU, with 96% (or 29% or all businesses) of those exporting trading there.

• 80% are confident about their cash flow position, which has stayed the same (57%) or improved (23%), marking a slight decrease from 82% since last quarter.

• Investment in training has slightly decreased with a balance of 25% having investment plans for training compared to 30% in Q4 2018. Investment in plant and equipment decreases against last quarter, with a net balance of 13% compared to 19% in Q4 2018.

QES Headlines (1)

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Market Pressures

• 67% are experiencing pressure to raise prices, down from 75% in Q4 2018.o Reasons for increasing prices comes from across the board, with 41%

attributing to increases in material prices (down from 43%), 17% to finance costs (down from 20% in Q4 2018), 33% to pay settlements (up from 21% in Q4 2018), and 55% (up from 46% in Q4) to other overheads.

• 65% reported external pressures (down from Q4 at 79%) with an increase in competition (50%, up from 41% in Q4). Interest rates are slightly down from 37% in Q4 to 31% in Q1:

o Exchange rates – 29% (24%)o Inflation – 41% (42%)o Competition – 50% (41%)o Taxation – 29% (33%)o Business rates - 33% (23%)o Interest rates – 31% (37%)

QES Headlines (2)

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Workforce and Recruitment

• In terms of change to workforce, 32% say they have increased their workforce (down from Q4 with 36%) and 11% have decreased their workforce (constant from Q4).

• Looking to the next quarter some increase is predicted, with 41% (45% at Q4) expecting to increase workforce and at the same time 3% (4% in Q4) predicting a decrease. 54% do not foresee any changes to their workforce at this point (48% in Q4 2017).

• The proportion attempting to recruit has remained constant with 55% (53% at Q4). Of those, 58% - similar to Q4 (59%) and 2017 Q1 (61%) - have experienced difficulties recruiting the right people. The positions businesses were looking to fill remain principally full-time and permanent posts, and decreasingly part-time:

QES Headlines (3)

o Skilled Manual/Technical – 35% (41%)o Professional/Managerial – 58% (69%)o Clerical – 42% (25%)o Semi/Unskilled – 21% (25%)

o Full time – 83% (84%)o Part time – 40% (35%)o Permanent – 25% (47%)o Temporary – 13% (24%)

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2%

18%

16%

64%

3%

10%

23%

65%

2%

18%

16%

64%

200 and over

50 - 199

20 - 49

0 - 19

Number of Employees

This quarter (Q1 2018)

Last year (Q1 2017)

Last quarter (Q4 2017)

Q. How many people do you employ at your site?

Sample Profile

Representing 6,281 employees (incl. sole-traders) splitting into

3,447 men (55%) and 2,848 women (45%)

7

16%

2%

3%

1%

1%

7%

5%

7%

10%

3%

4%

39%

0%

3%

2%

0%

6%

10%

6%

10%

8%

10%

10%

36%

16%

2%

3%

1%

1%

7%

5%

7%

10%

3%

4%

39%

Other sector

Construction

Manufacture of E or IT Goods

Transport/Distribution

Raw Material Production, etc

Consumer Services

Public/Voluntary Sector Services

Manufacture of other goods

Marketing/Media

Retail/Wholesale

Hotels/Catering/Leisure

Professional Services

This quarter (Q1 2018)Last year (Q1 2017)Last quarter (Q4 2017)

Q. What is your main business activity?

Business Activity

7

8

8%

6%

34%

52%

10%

17%

34%

39%

8%

17%

41%

33%

NotApplicable

Decreased

No Change

Increased

Overall UK Sales

This quarter (Q1 2018) Last year (Q1 2017) Last quarter (Q4 2017)

25%

6%

27%

42%

27%

10%

31%

32%

24%

16%

32%

28%

NotApplicable

Decreased

No Change

Increased

Overall UK Orders

Q. Excluding seasonal variations, over the past 3 months… (i) UK sales/custom/bookings have.. (ii) UK orders/advance custom/bookings have..

Quarterly Change in UK Sales and Orders

9

75%

4%

11%

9%

71%

2%

14%

11%

71%

1%

17%

10%

NotApplicable

Decreased

NoChange

Increased

Overall Export Sales


77%

6%

11%

6%

71%

4%

13%

10%

71%

2%

14%

8%

NotApplicable

Decreased

No Change

Increased

Overall Export Orders

Q. Excluding seasonal variations, over the past 3 months… (i) Export sales/custom/bookings have.. (ii) Export orders/advance custom/bookings have..

Quarterly Change in Export Sales and Orders30% export to overseas markets (27% of these use Cornwall Chamber to process their export documentation.)

10

23%

31%

38%

42%

46%

54%

96%

Latin America

Africa

Middle East

Europe (non-EU)

Asia Pacific

North America

EU

Export Destinations


Q. Where does your business export goods or service?

Export Destinations

96% of those who export supply goods or service to the EU.

11

2%

11%

51%

36%

4%

11%

60%

26%

2%

11%

54%

32%

NotApplicable

Decreased

No Change

Increased

Quarterly Change in Workforce


2%

4%

48%

45%

4%

4%

57%

35%

1%

3%

54%

41%

NotApplicable

Decrease

No Change

Increase

Expected Quarterly Workforce Change

Q. Over the past 3 months… (i) has your workforce.. (ii) do you expect your workforce to..

Workforce Changes and Expectations

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24%

47%

35%

84%

27%

63%

37%

84%

13%

25%

40%

83%

Temporary Jobs

Permanent Jobs

Part Time Jobs

Full Time Jobs

Attempted to Recruit …


Last year (Q1 2017)


Tried to Recruit, 55%

Not Tried, 39%

Not applicable,

6%

Last quarter(Q4 2017)

53%

Last year(Q1 2017)

46%

Q. Have you tried to recruit staff over the past 3 months?Q. If you have tried to recruit staff… were they for…

Staff Recruitment

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No, 42% Yes, 58%

Difficulties RecruitingSuitable Staff

Last quarter(Q4 2017)

59%

Last year(Q1 2017)

61%25%

25%

41%

69%

35%

38%

51%

48%

42%

21%

35%

58%

Clerical

Semi / Unskilled

SkilledManual/Technical

Professional /Managerial

Tried to Recruit…


Q. If you have tried to recruit staff… Did you experience any difficulties finding suitable staff?Q. For which of the following categories of employee have you tried to recruit?

Staff Recruitment

14

6%

11%

43%

39%

10%

19%

47%

24%

7%

13%

57%

23%

Not Applicable

Worsened

Remained theSame

Improved

Quarterly Cashflow Changes


6%

1%

56%

37%

7%

4%

53%

37%

7%

2%

63%

28%

NotApplicable

Decrease

RemainConstant

Increase

Expected Quarterly Price Trends

Q. Over the past 3 months has your cashflow…Q. Over the next 3 months do you expect your prices to…

Cashflow Change and Price Expectations

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10%

2%

56%

32%

20%

8%

50%

22%

14%

5%

52%

30%

Not Applicable

Decrease

Remain theSame

Increase

Planned Investment: Training


32%

3%

43%

22%

27%

11%

39%

23%

23%

9%

46%

22%

NotApplicable

Decrease

Remain theSame

Increase

Planned Investment: Plant and Equipment

Q. Have your investment plans for Training…Q. Have your investment plans for Plant/Machinery/Equipment…

Investment Intentions

16

10%

41%

48%

13%

51%

37%

8%

59%

33%

Not Applicable

Below Capacity

Full Capacity


Q. Are you currently operating at...

Operating Capacity

17

2%

6%

19%

73%

4%

9%

20%

68%

5%

10%

21%

64%

Not Applicable

Decrease

Remain theSame

Increase

Turnover - Expectations for Next 12 Months


5%

12%

24%

59%

8%

14%

26%

51%

5%

17%

22%

56%

NotApplicable

Decrease

Remain theSame

Increase

Profitability - Expectations for Next 12 Months

Q. Do you believe that over the next 12 months… (i) Turnover will.. (ii) Profitability will..

Business Confidence

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46%

20%

21%

43%

30%

12%

17%

29%

55%

17%

33%

41%

Other Overheads

Finance Costs

Pay Settlements

Price of RawMaterials


Last year (Q1 2017)


67% of 2018 Q1 respondents are suffering pressures to raise prices (51% at 2017 Q4 and 69% last year at 2017 Q1.)

Q. Is your business currently suffering pressures to raise its prices from any of the following? (Please tick all that apply.)

Pressure to Raise Prices

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65% of 2018 Q1 respondents identified one or more of the above as issues of concern,compared to 79% for 2017 Q4 and last year 2017 Q1.

42%

37%

23%

24%

33%

41%

32%

18%

33%

29%

28%

33%

41%

31%

33%

29%

29%

50%

Inflation

Interest Rates

Business Rates

Exchange Rates

Taxation

Competition


Q. Please indicate which of these following factors are more of a concern to your business than 3 months ago. (Please tick all that apply.)

External Business Concerns

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Q. Please use this space to make further comments regarding the issues covered in this survey.

Final Comments (1)“Crisis with Local Authority prescriptive requirements in new contracting process. The whole sector has come together and instructed lawyers who specialize in social care/Care Act.”“I don't think Brexit will have much of an impact.”“Indecision over Brexit is our main concern. We want to see "negotiations" with the EU terminated and the UK government making concrete plans for taking back control and governing our country from March 2019 with no transition period.”“Some of the quarterlies seem peripheral to us, so lots of the questions don't immediately apply.”“The chaotic Brexit behaviour by UK "politicians" is also showing Brexit to be the disaster it really is but at the expense of small companies like ours; we are in survival mode right now, never mind growth or expansion.”“The ineptitude of our Politicians on all side of the house is seriously damaging the economic health of the nation. We are experiencing a stark reigning in of discretionary spend by our customers. On top of that we are experiencing an inexorable rise in the cost of overheads and raw materials -particularly food. The greatest threat to our business, however, is a 245% increase in business rates payable!”

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Final Comments (2)“There are significant increases in cost pressures, largely Government driven, and an accelerating downward pressure on real incomes leading to a reduction in disposable income. Unless things change this double whammy is not sustainable long-term.”“We are a small business started up 14 months ago. We would very much have benefited form some grant funding to get us started and help us reach a greater capacity quicker and take on staff creating jobs. The business hasn't managed to gain funding despite having some connectivity with grant funding and a knowledge of this through the Growth Hub. The reality is that whilst we believe our business would be prime for investment from grant funding and enable us to feed into the local and wider Cornwall economy both quicker and with more strength, the timescales and requirements regarding this funding have prohibited any download. This has meant that we have had to develop hand to mouth and been prohibited significant growth due to both cash flow issues and not having sufficient stability of cash flow to take on proper staff in real positions with permanent contracts. This also then means we have had to hold back on marketing because we simply cannot cover the speed of development of the business and how it would go. The projections for our business are great, it lends itself to the tourism market but also the corporate responsibility for employers in terms of team building, fits an educational remit in terms of schools/ colleges and students and is a great experience for leisure and recreation for young people, adults and multi generational families as well as being really, really popular as a holiday / tourism activity. (continued)

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Final Comments (3)We are committed to generating economic development and growth as a responsible and committed business in the local economy (Cornwall) and very much see the link between our growth and being able to employ staff and bring in income to Cornwall through our tourism remit but simply cant grow quick enough or feel confident in doing so on our own. We have recently reengaged with the Growth Hub for further support and guidance and we really hope this helps us realise at least some of the potential this business has for both ourselves as business owners, but most importantly for the people we can offer employment to and the local economy we can boost in many ways e.g. last summer, it was our privilege to bring people down from as far as Saltash / Plymouth for a day out pivoting on our escape rooms, but at the same time, recommending other activities such as Land's End, Jubilee Pool and encouraging them to stay for the day and eat, drink and enjoy West Cornwall. Having opened up a second site in Truro, we aim to do the same this years round. In our experience, the help out there for small businesses is not facilitating businesses such as ours and we could really do with some.”

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The Cornwall QES is managed on behalf of the Cornwall Chamber by PFA Research Ltd

Cornwall Quarterly Economic Survey1st Quarter 2018

PFA Research LtdTremough Innovation CentrePenrynTR10 9TA

W: www.pfa-research.comE: [email protected]: 01326 375705

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Cornwall Quarterly Economic Survey 1st Quarter 2018 · This quarter (Q1 2018) Last year (Q1 2017)...

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