One manufacturer who is not worried about the cost of credit is Brian Cooke, chairman of Castings, a West Midlands-based maker of specialised metal parts for the truck industry.
Unlike many, he has eschewed borrowing over the years, preferring to invest in plant and machinery using purely the cash income from selling products. Castings also has shunned calls to make large acquisitions that would have pushed up gearing.
“Two years ago, all the pundits we telling me holding on to cash was the wrong policy and we should be do something ‘useful’ with it,” says Mr Cooke.
“Luckily, I didn’t take any notice of them. The events of the past few weeks indicate that I was right and they were wrong.”
Indeed, the company has turned away banks and other institutions that were keen to get their hands on the £27m of net cash that Castings has at its disposal. Castings has 1,200 employees and had sales last year of £97m to companies such as Scania, Volvo and DAF.
Mr Cooke does not expect a slowdown to necessarily be any worse than the “four or five” significant declines that he has experienced in his time at the company, which he joined in 1960.
“If there is a recession, this is just a fact of life,” he says.
Early next year, Castings’ latest investment – a £16m plant in Leeds to complement its main factory in Brownhills, near Birmingham – should be ready for action.
Is Mr Cooke worried that the new site is about to come on stream just at the time when demand from Castings’ main customers starts to plummet? “Not at all,” says Mr Cooke. “We are investing for the long term, not the short term. If the demand we want is not there right away, we will run the plant at a lower capacity than we’d like for a certain period.
“In the longer term, the world needs transport. Companies will continue to build trucks and Castings is likely to be in a good position to supply parts for them.”
