Extending the government’s job retention scheme and giving companies more flexibility could help safeguard thousands of industrial jobs, according to a new study.
Members of the Confederation of British Metalforming (CBM) have predicted they may be forced to cut up to 30% of jobs (12,000 positions) if financial support was taken away at the end of June.
The UK’s trade body for manufacturers of fasteners, forgings, pressings, cold-rolled and sheet metal products said its members are concerned over the time taken for the economy to recover from Covid-19 and the need to have further financial support in place while volumes increase.
Bosses believe that an extension of the job retention scheme will give them much-needed breathing space and remove the need for them to take immediate decisions on letting some of their employees go.
President of the CBM, Steve Morley commented: “While there was some optimism in manufacturing prior to Covid-19, the sector had suffered from lack of investment throughout the insecurity caused by Brexit.
“So, while our members are all hoping for an immediate bounce back in the economy, the reality is that volumes will increase at a much slower rate and industry will need help to protect workers in the meantime.”
The more than 200 CBM members range from SMEs to large companies supplying direct to OEMs, so their day-to-day requirements will differ.
Morley explained: “The smaller firms may need to call employees in daily if they get new orders, while the larger companies – working off schedules – may be faced with having to employ short-time working, possibly three-day weeks instead of five. These different scenarios will all need to be covered by the government’s scheme.”
A furlough extension could help reduce the amount of redundancies from 30% to 10%. The Daily Telegraph has reported that ministerial discussions are currently underway to extend the scheme until September, albeit at a reduced rate of 60%.
Trade credit insurance is proving another major issue for manufacturers, according to the CBM, with cover being reduced or taken away altogether.
This is impacting a sizeable proportion of businesses, who use invoice discounting to draw down money as soon as they raise an invoice. In some instances, this could be 100%, but with credit insurance reduced, it could now be as low as 25%, seriously affecting company cashflows.
There is also still plenty of concern around access to the government’s Coronavirus Business Interruption Loan Scheme (CBILS) and the reluctance of banks to back viable firms, leaving many looking for alternative financial support.
CBM CEO, Geraldine Bolton commented: “This remains one of our biggest challenges – the restrictions placed on banks are not covering those larger SMEs as the ‘Bounce Back’ loans have done.
“The liquidity test for CBILS needs to be less restrictive, after all there is an argument that if you’ve survived three years of Brexit uncertainty, you are a viable business.