A beneficial exchange rate, the economy growing, annual investment allowance doubled to £500,000, the Regional Growth Fund paying up to 20% deposits… there are unlikely to be many better times to re-equip.

It looked like a good time to invest last year. It’s even better this year: The strength of sterling; Government initiatives (“God bless them,” says Gary Davis, the Regional Sales Manager of Flow waterjet cutters); a higher rate of growth in the UK than any other developed country… what’s holding you back?

Not much by the look of it. All the stone machinery suppliers in the UK are reporting a bumper year as the industry actions investment decisions that have been on hold since 2008.

The International Monetary Fund (IMF), which says Britain will easily be the fastest-growing developed economy in 2014, also says sterling is overvalued by 5-10%. Exchange rates are volatile, of course, but if it is, there is likely to be some adjustment at some point, but before that it means machines priced in euros and paid for in pounds are particularly good value.

On top of that, the £3.2billion of Regional Growth Fund (RGF) is effectively knocking 20% off the price of machinery by paying deposits of up to that amount. The support is available only if the company could not afford the investment without this help and it will result in the retention or creation of jobs (see the story below for more information about the RGF).

The RGF is restricted to companies in England outside London, but Darren Bill, a Director of machinery supply company Roccia, says at least 50% of Roccia’s customers are now benefiting from this fund.

The Government has also doubled the Annual Investment Allowance to £500,000. Last year it increased it tenfold to £250,000 having cut it by a quarter the year before.

The increase last year was supposed to be a temporary measure that was due to end in January next year when the allowance would go back to being £25,000.

Instead, and in response to lobbying by industry, the Government has made it even more generous, albeit still temporary, this time to the end of next year.

The Annual Investment Allowance means capital investment can be claimed against tax in the same year as the investment is made up to the stated limit (ie £500,000 next year). Announcing the new rate, the Chancellor said the move would cost the Revenue £2billion but “I want to do something today that helps all businesses invest.”

Compared with the billions used to bail out the banks, the current concessions to business are relatively small fry. But it is a good use of public money because it can only be claimed against investments – investments that will, presumably, improve productivity and create wealth.

And productivity in the UK needs improving. Figures from the Office of National Statistics this year showed Britain’s earnings per hour worked are 21% lower than the average of the other six members of the G7 (USA, Germany, France, Italy, Japan and Canada) and 25% less in terms of output per worker. Some efficient new machinery should help reduce that gap, making the UK better off as well as more competitive internationally.

“It’s the perfect time to invest,” says Darren Bill. And a lot of Roccia’s customers clearly agree. Many have already bought new machinery and many others are on the verge of doing so after putting off the decision for four, five or six years, which has left a residual pent-up demand. “Companies are buying machines and taking people on,” says Darren. “Long may that continue.”

So what is the money being spent on in the stone industry and what are the latest developments in machinery that will help improve productivity? NSS speaks to the companies that supply the machinery in the UK and Ireland ahead of Marmomacc, the major Italian international stone exhibition in Verona this month (24-27 September), where many of the latest developments in stone processing machinery will be unveiled.

The Regional Growth Fund

Several stone companies have used the Regional Growth Fund (RGF) to bring forward investment plans that have enabled them to employ or retain staff who would otherwise have lost their jobs.

In order to assist in supporting small and medium sized enterprise (SME) investment, Five Arrows Leasing Group Ltd (FALG) has been awarded a grant under the Government Regional Growth Fund, to be distributed via FALG and its subsidiary companies, of which Five Arrows Business Finance PLC is one. The Regional Growth Fund is a £3.2billion fund being operated throughout England until 2017. FALG’s RGF supports capital investment projects and programmes by SMEs that create economic growth and sustainable employment. The fund is not available to businesses located in London boroughs, nor Wales and Scotland.

Up to £10,000 can be provided for each job created or safeguarded as a result of investment in new machinery. Small companies can obtain a maximum of 20% of the cost of the machine and medium-sized companies up to 10% of the cost. Small companies are defined as those with up to 50 employees and an annual turnover not exceeding l10million (£7million). Medium-sized companies are those employing 50-250 employees with an annual turnover of l50million (£35million).

The RGF funds are used to help raise a suitable deposit for the funder to agree the finance where they would not normally be able to do so. Consequently, if your company has the means to fund a deposit, you will not be eligible for the RGF because it is intended to make possible purchases the company could not otherwise afford.

Larger companies can apply directly to Government for grants in excess of £1.2million. Small to medium-sized firms deal with finance companies such as Five Arrows Business Finance PLC (FABF), familiar to many as City Business Finance, which has helped to finance capital investment in the stone industry for many years. City Business Finance changed its name in April this year and the Five Arrows Leasing Group is wholly owned by the Rothschild Banking Group.

One of the companies that has benefited from the RGF with FABF is Natural Stone Direct (Cumbria) Ltd. It received a 20% contribution towards the deposit on a new GMM Litox saw replacing a Eura. Joe Jameson at the company says the new equipment has considerably increased his company’s capacity, allowing it to safeguard several positions and to employ one extra full time employee already, with another full time job and at least one part time job on the cards.

Joe praises Matthew Gilbert, Director Sales London of FABF, for guiding him through the process of applying for the RGF and making it so simple and quick – it took just 10 days to be told his application had been successful.

Joe told NSS his new saw was producing large Lazenby sandstone gateposts as we spoke. “We couldn’t have touched that before we got the Litox. It’s opened up the market for us.”

Neither is it a question of machinery replacing hand skills. Joe says it is hard enough to find skilled stonemasons, and even when you find them they cannot do every job, not least because working by hand would be too slow and expensive and the machine can be more accurate. “English Heritage is a perfect example. It has to be perfect for them and it will be perfect with the Litox and its 3D scanner”.

Matthew Gilbert explains why Five Arrows Business Finance Plc is ideally positioned to help the stone industry invest in new and used machinery.

FABF’s focus on providing competitive and flexible finance packages remains unchanged from its earlier incarnation. “We remain one of the UK’s leading providers of finance solutions to the industry and related trades.”

Matthew says that while the UK economy is clearly recovering strongly, securing competitive finance is still challenging for many SMEs as they plan for growth and require new technology to remain competitive.

“Whether you need to expand or replace equipment, we can help. We offer straightforward hire purchase as well as sale and hire purchase back facilities that can be used to raise capital to fund particular projects or provide a cash injection.”

If you would like to establish if your business could qualify for the RGF, FABF’s dedicated Sales Team will be happy to walk you through the process of applying for the grant. You can call them on 01959 569 666.