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Electronics Production | December 08, 2010

Some UK electronics manufacturers not worth lending to

Banks are cautious when it comes to lending money to electronics manufacturers in the UK. Most see this as a not entirely good thing, but market analysts Plimsoll thinks that the banks are right – many companies in the market are just not worth the risk.
It is dangerous to operate on micro profit margins and many cases in other industry sectors could indicate what might be in store for the EMS industry next year. The analysis states that 467 companies in the UK market come with profit margins of less than 1.5% (328 of which are making a loss). Only the slightest problem could make them fail.

However, the analysts don't negate the fact that healthy and good companies are being turned down by banks. But, the financial sector was reprimanded for reckless lending that lead to the economic crisis and in at least 467 cases in the Electronics Manufacturers industry the banks are right in not lending.

But there are also good news too. 313 companies carried out tough decision at an early stage and focused on the bottom line instead of chasing sales over the last few years. And these are the companies that banks are happy - and most likely - to lend money too.
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Source: EIPC Newsletter

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