South West manufacturers need urgent financial support amid coronavirus crisis
Latest Manufacturing Barometer highlights falling sales, profits and production volumes among region’s SME businesses
SME manufacturers are calling for greater and faster financial support from the Government as they confront plummeting sales, profits and production volumes amid the ongoing Covid-19 pandemic.
The latest South West Manufacturing Barometer reveals a stark picture of how the virus is affecting industrial confidence and future predictions around safeguarding jobs across the region.
Conducted by South West Manufacturing Advisory Service (SWMAS) and the Manufacturing Growth Programme (MGP), the report shows that well over 80 per cent of SME manufacturers expect sales to drop over the next six months, while eight of out of ten respondents have experienced a fall in production volumes since the Covid-19 forced the UK into lockdown.
Meanwhile more than half – 54 per cent – of manufacturing firms in the South West believe they will need to cut jobs in the next half-year, despite the rollout of the Government’s business support package which includes access to grants and its furloughing scheme to boost employee retention.
Almost half of firms - 49 per cent – are expecting to reduce investment in plant and machinery over the next six months, whereas in January, only 10 per cent were planning to lower their spend in these areas. In fact, over half (54 per cent) were planning future investment at the beginning of this year.
The Manufacturing Barometer also shows that over 85 per cent of SME manufacturers in the South West have seen an impact on staff attendance due to the Coronavirus outbreak, while more than eight out of ten say their supply chains have also been affected.
Simon Howes, of SWMAS, said: “Covid-19 is having a huge impact across the region’s economy but it is particularly 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 reduced, so therefore the vast majority of South West businesses surveyed have reported a fall in production volumes.
“Some 80 per cent of the firms who responded also told us that financial support is what they need most to survive the crisis, with only 19 per cent believing that the Government is doing enough to help the sector to cope with the pandemic.
“Meanwhile 17 per cent of firms highlight the need for both supply chain support and help with risk management and strategic planning.
“Top of the support wish list for SME manufacturers is financial assistance and for the Government to go ‘faster and further.’ Although the existing package of measures has been welcomed, there remains a pressing need for a deeper level of sector-specific advice and support.
“SME manufacturing must be protected now to ensure it is ready to spring back into action once the Covid-19 crisis is finally over. The Covid-19 pandemic has also brought home how reliant we have become on overseas supply of strategically critical important items. We must learn from this and re-establish UK production.”
The latest Manufacturing Barometer, which is the largest survey of its type in England, reflects a positive response from UK manufacturing to the urgent request for vital medical equipment and PPE.
In the South West just over a fifth – 22 per cent – of companies surveyed have already responded to the Government’s call, with a further 7 per cent looking for advice on switching their production lines and get involved. Meanwhile a number of firms say they are adapting their processes and products in order to navigate their way through the crisis.
“Considering the impact that Covid-19 continues to have on the UK economy, it is no great surprise to see that every indicator for the South West’s SME manufacturers has worsened over the last six months,” says Simon Howes.
“However, it is heartening to see that many businesses are adapting to the situation by diversifying their processes and product ranges in all manner of innovative ways.”
