The Government is being urged to provide direct support to key strategic manufacturing sectors and companies to ensure their short-term survival through the pandemic.
The call – from Make UK, the manufacturers’ organisation – also urges the removal of the current security restrictions on loans, to protect significant numbers of highly skilled jobs and critical supply chains across all regions of the UK.
It follows widespread damage being caused to industry by Covid 19 and its latest Manufacturing Monitor published last Friday showing that almost three fifths of manufacturers now believe it will take more than a year for trading conditions to return to normal.
According to Make UK, the Government was right to focus on the immediate need to protect individuals and jobs through the Job Retention Scheme.
However, moving forward into the recovery phase, Make UK now believes that a more radical approach is needed to protect the internationally competitive position of key strategic sectors and companies which were trading positively before the pandemic.
This should include ensuring that companies are able to access capital to service debt incurred to survive the lockdown and be able to grow in the future.
Given the extent of the damage inflicted to date is so severe that unless direct financial support is provided through the intervening period of the next year, as well as significant hurdles to loans be removed, Make UK believes major companies may be damaged to such an extent that they will not be in a position to take people off furlough and will resort to substantial redundancies.
Make UK has called for a National Skills Taskforce to be set up to retain key skills in the sector with its latest survey showing a quarter of companies plan to make redundancies in the next six months with less than a third currently ruling them out.
In particular, Make UK believes such support should especially be targeted at the Aerospace, Automotive and Steel sectors which have very long supply chains and would therefore also see the benefits. This support would be in line with policies being adopted by Governments to support key sectors in competitor countries.
The organisation believes such support is also essential in regions of the UK which have a high dependency on these key sectors which would suffer disproportionate economic harm and a failure to provide the much needed levelling up of economic performance.
“We are now in such uncharted territory that what would until recently been thought of as unthinkable is now very much the reality,” said Make UK Chief Executive, Stephen Phipson.
“While the support schemes in operation are providing significant support to the economy there are some sectors and companies who are fundamentally sound businesses and were trading positively before the pandemic.
“Instead, however, they have now been driven to the cliff edge by the nature of this crisis and may not survive without direct Government intervention.
“These companies are in key strategic sectors for the UK internationally and provide substantial numbers of highly skilled jobs across the UK and down through their supply chains.
“Many are also in regions which would suffer disproportionate economic harm if they did not survive. Government should therefore intervene directly to provide support and ensure their survival.
“Furthermore, there are thousands of companies who have had to take on debt to survive through lockdown. Government needs to intervene to ensure they have access to capital not only to be able to service the debt, but also to grow in the future.”