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Chris Hurley is investment director at LDC in Birmingham. LDC won the Private Equity House of the Year category at the Midlands Dealmakers Awards 2010

While some market sectors fare better than others in challenging economic times, generally speaking the manufacturing sector experiences a much tougher time when the economy is going through a downturn. There is an inevitable pressure on pricing yet the costs associated with raw materials and distribution also rise.

Having played a significant role in the Midlands business economy for over 100 years, though, manufacturing in our region has had a far greater incentive to ride the impact of the recent recession. Boasting world-class manufacturing capabilities and a wealth of high quality businesses, many of which make significant contributions to productivity growth and are lead drivers of innovation, the Midlands manufacturing and engineering sector is fundamental to our region’s, and indeed the UK’s, economic growth. Invariably they have had to innovate in order to survive.

The recent Budget saw chancellor George Osborne introduce a number of pro-manufacturing and engineering measures. These encouraging signs included the doubling of planned new university technical colleges from 12 to at least 24, as well as a promise to fund an additional 40,000 apprenticeships, together with 10,000 higher-level training places.

Osborne also outlined that the government will be creating 21 ‘enterprise zones’ in England, each of which will be backed by tax incentives. The Budget confirmed that these first Enterprise Zones are to be based within 11 local enterprise partnership (LEP) regions including Birmingham and Solihull and the Black Country.

So looking ahead there appear to be signs that with continued government support, growth prospects within manufacturing both in the Midlands and across the UK remain encouraging. Is this therefore an appropriate time for management teams to consider expansion of their businesses into new markets and territories? Possibly so, but such an approach must be both considered and quantified.

Working closely with a business’s management team, the right private equity partner can help to support and deliver such a growth strategy. The ingredients of a good private equity partnership should be based upon a close working relationship with a knowledgeable management team whose strategy is clearly outlined in a dynamic and challenging strategic plan. This is a fundamental platform upon which growth can be delivered allowing a business to be well positioned for the next stage of its development.

This approach is no less relevant within manufacturing and industrial businesses, which may be looking to drive the execution of growth plans both within the UK and overseas. As well as striving to consolidate their businesses’ position within core UK markets, it may be that international trade will also be a viable expansion option; again, this is an area that management teams could benefit from the previous experiences of a private equity investor.

Our experience of working with manufacturing and industrial businesses is widespread and throughout the recession, we have continued to invest in progressive specialist manufacturing - a sector in which LDC’s Midlands team has real investment expertise.

Most recently, in February this year, we invested in Kee Safety, a leading global provider of safety solutions, which is headquartered in Meriden. With new products and a rapidly expanding overseas presence, this is a business which has strong growth prospects. We also have investment interest in Wolverhampton-based Nuclear Engineering Services, a niche engineering solutions group focusing on the nuclear, marine defence and other specialist industrial sectors and AIM Aviation, a leading global provider of cabin interior design for the aircraft industry.

These investments support LDC’s belief that a high quality manufacturing or specialist engineering company that has the right business plan, an ambitious management team and a skilled workforce producing a market leading product can maintain momentum throughout difficult economic periods, and from LDC’s perspective present a viable investment opportunity. For the UK’s GDP this has to be good news.