UK Manufacturing Barometer reveals ongoing coronavirus concerns for British firms
A key sector survey has found that UK manufacturing businesses, including those operating within confectionery, snacks and bakery markets, require greater and faster support from government amid the coronavirus crisis.
The latest Manufacturing Barometer, which surveyed over 600 firms across England, revealed a stark picture of how the virus is affecting industrial confidence, with almost 9 out of 10 respondents predicting a drastic decline in production volumes and a similar number (85%) expecting sales to drop over the next six months.
Conducted by South West Manufacturing Advisory Service (SWMAS) and the Manufacturing Growth Programme (MGP), the report also shows that 55% of firms believe they will need to cut jobs between now and October, despite the business grants on offer and the furloughing scheme designed to boost employee retention.
The overwhelming majority of manufacturing SMEs surveyed (84%) say they require urgent financial support to get through the current climate, with only 16 per cent confident that the Government is doing enough to help the sector cope with the pandemic.
In terms of approaches to handling the situation, businesses are attempting to diversify into related product areas, as with Leeds-based Love Handmade Cakes is looking to diversify into bread and pasta to get it through these next few months.
“We have had to close our business, as we provide cake and cake products to the food service market, including cafes, restaurants, garden centres and so on.
“When the Government decided to close pubs, restaurants and leisure facilities our customer orders disappeared and, in fact, six frozen orders we had already produced and were due to leave our business, were rejected. Sales lost, cash lost, explained Paulla McCann, managing director.
She added: “Our entire market disappeared overnight. We have two options to get us through this – continued government support over and beyond the three months for salaries or we find a market to sell to. Maybe bread and pasta or any other products that are low in stock supply chain wise and we can manufacture within our bakery environment.”
Speaking on the latest barometer survey, Simon Howes of SWMAS explained that there were considerable challenges facing the nation’s manufacturing sector.
He said: “COVID-19 is having a huge impact across the UK economy, but it is especially problematic for our sector as manufacturing cannot be carried out remotely, relying as it does on physical interaction with machinery and parts.
“Current restrictions and the ongoing lockdown measures mean that capacity is dramatically reduced, therefore the majority of businesses are reporting an unprecedented fall in production volumes.
“Top of the wish list for SME manufacturers is stronger financial assistance and for Government to go ‘faster and further’. While the existing package of measures has been welcomed, there remains a pressing need for a deeper level of sector-specific advice and support.
“This crisis has brought home how reliant we have become on overseas supply of strategically critical items. We must learn from this and re-establish UK production of these parts and protect SME manufacturing now, in order to ensure it is ready to spring back into action once the COVID-19 crisis is finally over.”
The latest Manufacturing Barometer, which is the largest survey of its type in England, reflects a positive response from UK manufacturing to support the urgent request for vital medical equipment and PPE.
Just over a fifth (21%) surveyed say they have already responded to the Government’s call, with a further 13% willing to access advice on how to switch their production lines.
Martin Coates, Managing Director of the Manufacturing Growth Programme, said: “It is no great surprise to see that every indicator for confidence among SME manufacturers appears to have worsened over the last six months due to the impact of Covid-19.
“That said, it is heartening to see that many SME manufacturers are adapting to the situation by diversifying their processes and product ranges in all manner of innovative ways.”
Other key finding in the Manufacturing Barometer, include:
· 84% of SME manufacturers have seen an impact on staff attendance due to the Coronavirus outbreak, with 82% saying that their supply chains have also been affected
· More than half of respondents plan to reduce future investment in plant and machinery
· Only 13% of firms are anticipating an increase in capital expenditure, compared with 51% in the previous Manufacturing Barometer carried out in January 2020
· One in four manufacturers highlight the need for supply chain support, whilst 22% are looking for help with risk management and strategic planning
For further information, please visit www.swmas.co.uk/business-support/covid-19-support-manufacturers