Bullish UK cleantech entrepreneurs confident of green growth
77 per cent plan to expand workforce in next 12 months but access to finance is key to growth
The UK’s cleantech companies are feeling optimistic about the future, according to new research released today by the Carbon Trust. Defying the wider economic uncertainty, the UK’s cleantech companies have become more confident about their prospects in the last year with more than three quarters (77 per cent) looking to recruit in the next 12 months and over a third (37 per cent) planning to expand into new export markets in the next two years.
The companies surveyed listed their own growth prospects, technical strength, current sales pipeline and market position as the key factors driving this optimism. Government legislation and policies were also given as reasons for confidence.
However, fundraising is essential for growth and 29 per cent of the companies interviewed cited a lack of access to finance as the main obstacle to expansion. This issue is even more acute for smaller companies (revenues of less than £2 million) where the number of companies concerned about access to finance rose to 40 per cent. Overall, about one in five companies indicated they would consider moving their HQ from the UK mainly owing to funding problems they believed would be less of a problem in other countries.
The research, commissioned by the Carbon Trust and conducted by the Cleantech Group, is the most comprehensive survey of UK cleantech companies this year. It provides insights into the confidence of the British cleantech sector, looking at a range of issues including growth prospects, the place of the UK in the global cleantech market and technology leadership.
Benj Sykes, director of innovations at the Carbon Trust, said:
“A thriving UK cleantech sector is essential for green growth in the UK. Our research shows that cleantech innovators are feeling optimistic about their prospects and have ambitious plans for the future. However, access to finance, along with a stable policy environment, will make or break these growth prospects. The sector offers significant growth opportunity and investors should now seize the opportunity to be part of this new industry.”
Econotherm is an example of a cleantech company that is going from strength to strength. Based in Wales, it is at the cutting edge of energy efficient technology – the only company of its kind in Europe. Its waste heat recuperators recover heat from industrial furnaces, boilers, ovens, thermal oxidizers and incinerators. The recovered heat is then used to warm air, water or thermal oil, public and operational spaces or even for electricity generation. It doubled staff and turnover in 2010 and predicts equivalent growth within the first half of 2011, with plans to expand its factory in Bridgend.
Chris Smith, managing director, Econotherm, said:
“We are overwhelmed with demand for our products from all corners of the globe including India, Italy, Chile, Middle East, Eastern Europe and Malaysia. Whilst it is extremely satisfying that we are manufacturing and exporting this patented technology from our UK production facility, we remain surprised at the relatively low level of domestic industrial demand.”
Richard Youngman, European Managing Director at the Cleantech Group, said:
“It was good to hear that UK cleantech companies are feeling more optimistic than a year ago, despite the headwinds. The angst over funding, the mixed views on government policies and incentives, and the challenge of educating the customer base is very much in line with the sentiments we hear and feel across global cleantech.”
The summary findings of the research are:
- 77 per cent of companies are planning to recruit in the next 12 months
- 37 per cent plan to move into new export markets in the next two years
- When asked to rate their confidence levels on a scale of 1 - 10 for today and a year ago, median confidence has increased from 6 last year to 8 today
- Companies are most optimistic about their growth (28 per cent), technology (19 per cent), government policies and legislation (16 per cent) and their sales pipeline (13 per cent)
- More than half (57 per cent) of companies are planning on raising funding in the next year
- The UK was most cited as a good country to locate a cleantech business, with Germany ranked second and the US ranked third; only 18 per cent would move their headquarters from the UK
- Government support in the UK was cited as a major strength due to legislation (FiTs, carbon targets and sustainable building regulations), and support from agencies
- Weaknesses were financing as the investment climate is currently too risk averse and focused on short-term returns and government support owing to a lack of consistency
- Respondents cited wind and marine energy as the top sectors in which the UK is a global leader
- The main obstacles to growth are market education (33 per cent), finance (29 per cent) and government policy/support (21 per cent)
- Specific skills in demand are engineering/technical (75 per cent) and sales/marketing (32 per cent)
- Most companies listed the UK as their key centre for manufacturing (252), followed by Germany (24 companies) and China (15 companies)
- Only 15 per cent of companies are planning to expand manufacturing to a new country in the next two years
- About half of all companies (51 per cent) outsource manufacturing, mainly to the UK but also to Germany and China
- The US, France and Germany were ranked as the top three export markets today. Of the businesses planning to expand their exports into new markets in the next two years, the US and Europe were ranked as the top two export targets, followed by China
About the research
- The research was carried out by the CleanTech Group in March 2011.
- 312 UK cleantech companies were interviewed - defined as companies developing and/or selling clean technology products or services.
- Interviews were carried out either in person or via the telephone and in some cases, a follow up questionnaire was completed and returned online.
- A summary presentation is available from the Carbon Trust press office with further information and key highlights and findings from the research.
About the Carbon Trust
The Carbon Trust is a not-for-profit company with the mission to accelerate the move to a low carbon economy, providing specialist support to business and the public sector to help cut carbon emissions, save energy and commercialise low carbon technologies. By stimulating low carbon action we contribute to key UK goals of lower carbon emissions, the development of low carbon businesses, increased energy security and associated jobs.
We help to cut carbon emissions now by:
- Providing specialist advice and finance to help organisations cut carbon
- Setting standards for carbon reduction
We reduce potential future carbon emissions by:
- Opening markets for low carbon technologies
- Leading industry collaborations to commercialise technologies
- Investing in early stage low carbon companies
About Cleantech Group
Cleantech Group, is a trusted global research and advisory firm focused on cleantech innovation, helping business leaders make smarter decisions involving clean technologies.
In addition to covering global innovation and investment trends, Cleantech Group offers market intelligence and insights into companies in the energy efficiency, smart grid, water and green transportation sectors.
The company’s growing international client base includes global corporations, investors, entrepreneurs, governments, and service providers.
Cleantech Group also produces the premier Cleantech Forum and Focus events worldwide, including upcoming events in Amsterdam, Toronto, and San Francisco. Details are available at http://cleantech.com.