The number of companies entering administration across the Midlands rose by 40% over the third quarter, the sharpest increase in the UK, according to new analysis from KPMG.
A review of notices filed in the London Gazette revealed that the number of Midlands companies entering administration rose from 36 in the second quarter to 50 in the third quarter.
This figure is significantly higher than the 39 appointments which occurred in the third quarter of 2018.
The companies primarily facing insolvency were smaller businesses or micro companies. Only 2% of Midlands companies entering administration had turnovers over £5m, suggesting that larger regional businesses fared better than their smaller counterparts.
The industries most affected in this area were infrastructure and industrial manufacturing, which accounted for 14 and 16 of the appointments respectively.
The infrastructure industry has faced high levels of insolvency in recent years, with an average of 14 per quarter since the start of 2017. Industrial manufacturing sector has seen a steeper rate of increase in appointments, with a rise from 11 in Q2 to 16 in Q4.
Chris Pole, restructuring partner at the Midlands KPMG, said: “2019 has been a troubling year for manufacturing businesses in the Midlands, with many facing a lack of investment due to continued political uncertainty.
“This has been exacerbated further by a slowdown in volume in the automotive space, which is a key sector for many manufacturing supply chains locally.”
He added: “The metal subsector has been particularly hard hit by a significant fall in the steel price throughout the first three quarters of 2019, caused by the availability of cheap steel from overseas. The sector has also been affected by delays to large construction and infrastructure projects.
“The good news is that many companies are now proactively addressing long-term issues and attempting to place themselves on a more sure financial footing, ahead of any further macro-economic challenges that are coming down the line.
“From CVA proposals for retailers, to refinancing in other sectors, there are definitely options out there, and they seem to be paying off for those firms that have opted to take a fiscally cautious approach.”