Thursday, July 9, 2020

East Midlands SME manufacturers need urgent financial support as job losses loom

Small to medium-sized (SMEs) manufacturers in the East Midlands are calling for greater and faster financial support from the Government, as they confront plummeting sales, production volumes and the prospect of job cuts amid the ongoing COVID-19 pandemic.

The latest Manufacturing Barometer, which surveyed 112 firms in the region, reveals a stark picture of how the virus is affecting industrial confidence, with nine out of ten respondents experiencing a drastic decline in production volumes, while 88% are expecting sales to drop over the next six months.

Conducted by the Manufacturing Growth Programme (MGP) and South West Manufacturing Advisory Service (SWMAS), the report also shows that 57% 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 (85%) say they require urgent financial support to get through the current climate, with only 17% confident that the Government is doing enough to help the sector cope with the pandemic.

Martin Coats, Managing Director of the Manufacturing Growth Programme (MGP), said: “COVID-19 is having a huge impact across the East Midlands, 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 East Midlands manufacturing to support the urgent request for vital medical equipment and PPE.

Nearly a fifth (17%) surveyed say they have already responded to the Government’s call, with a further 15% willing to access advice on how to switch their production lines.

Martin continued: “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:

  • 81% of SME manufacturers have seen an impact on staff attendance due to the Coronavirus outbreak, with 84% saying that their supply chains have also been affected
  • 60% 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
  • Over a quarter of East Midlands manufacturers (27%) highlight the need for supply chain support, whereas one fifth are looking for help with risk management and strategic planning

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