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While the credit crisis is making it more difficult for businesses and homebuyers alike to borrow money, suggesting an economy in for a bumpy ride, the business mood outside sectors such as financials and property isn’t as gloomy as the headlines suggest.

One such haven appears to be UK manufacturing, which remains confident about the challenges that lie ahead, at least according to industry body the Engineering Employers Federation (EEF). Last year, argues the EEF, the UK manufacturing sector was able to overcome a challenging economic environment thanks to major restructuring undertaken in prior years, which enabled firms to survive in the face of increasing global competition.

Its survey of some 200 companies found that an increased focus on innovation, more sophisticated products and customer service is helping UK manufacturing to compete with low-cost China and India without slashing prices. ‘Instead of competing on price alone, they are adopting a range of strategies to take advantage of emerging markets,’ said the EEF. ‘While there are many other challenges on the horizon, manufacturers look well placed to rise to them.’ On a sober note, the credit crunch ‘could have significant negative implications for UK manufacturing’ if uncertainties rumble on too long.

Meanwhile, several quoted manufacturing groups have delighted investors with strong profits improvements for 2007, among them cash-generative high-tech components play Senior, whose adjusted profits powered ahead by 91 per cent to almost £38 million, allowing for a 20 per cent full-year dividend increase. Actuator and gearbox-maker Rotork reported record sales and profit performances in all three divisions for 2007, driving profit before tax 24 per cent higher to £57.3 million. The final dividend was increased by 20 per cent to 14p.

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