UK Manufacturing
The latest Manufacturing Barometer has revealed a more upbeat picture as the sector emerges from lockdown, but suggests there is still a long way to go until confidence is fully regained.
The Manufacturing Barometer, the largest survey of SME manufacturers in England, shows that the sector is bouncing back from the worst effects of Covid-19 – with a degree of increased optimism around turnover, profits, jobs and investment.
The previous report, surveyed in April as the COVID-19 crisis intensified, showed plummeting sales and production volumes, as well as the probability of deep job cuts throughout the sector.
Three months on, the latest report reveals that while the key indicators remain in ‘negative territory’, manufacturers are slightly more optimistic about their prospects over the short and medium term. However, it is clear there are still difficult times ahead for the manufacturing sector.
Conducted by SWMAS (South West Manufacturing Advisory Service) and the Manufacturing Growth Programme (MGP), the report reveals that over three quarters of firms (76 per cent) saw sales drop in the last six months, with almost half (48 per cent) still predicting sales to decrease between now and the end of the year.
More encouragingly though, 40 per cent of those questioned are expecting future sales to increase, which is a massive improvement on the nine per cent who predicted this back in April.
Over a third of respondents (39 per cent) describe their current status as static or growing, with some businesses reporting very little change since the COVID-19 crisis, and others experiencing an increase in product demand.
However, others have seen their customer base almost vanish overnight, and 59 per cent of respondents describe their business’ current status as “surviving” or “recovering”, which shows the majority of SME manufacturers are still facing significant challenges.
In April, only 16 per cent of respondents thought that the Government support on offer was sufficient to survive the crisis.
This survey confirms that the same percentage (16 per cent) have already taken additional steps, above and beyond the support from government, to protect their cashflow, and a further 29 per cent identify a need for more financial help going forward.
Although 80 per cent of manufacturers have utilised the Furlough scheme to retain employees, it is concerning that more than a quarter have already been forced to make redundancies, while over a third of businesses (36 per cent) expect to make further cuts to their workforce within the next six months.
This coincides with the end of the Furlough scheme in October, and shows a need to bridge the gap further, until manufacturing is able to operate at full capacity once again.
Whilst the government support has benefited businesses across the UK, only 32 per cent of SME manufacturers surveyed have taken advantage of the Coronavirus Business Interruption Loan Scheme (CBILS).
The VAT payment holiday was welcomed by over half of those surveyed. The results and feedback received indicates that additional sector-specific Government support is still required to ensure that the manufacturing industry, key for research and development, export, and high value jobs, continues to recover and grow over the coming months.
The report also shows that protecting cashflow is of continued importance as manufacturers move out of lockdown, with over a third of businesses surveyed expecting future investment in ca
The report also shows that protecting cashflow is of continued importance as manufacturers move out of lockdown, with over a third of businesses surveyed expecting future investment in capex and staff to decrease between now and January 2021.
Nick Golding, Managing Director at SWMAS, said: “The latest Manufacturing Barometer shows that over 75 per cent of businesses have had their sales significantly impacted, and only a small number have been able to access government support schemes to help them survive.
“The survey shows a picture of resilience and innovation from a sector that is doing its best to survive the Covid-19 crisis, but more still needs to be done to get it back on its feet.”