SME manufacturers in England are bouncing back from the worst effects of Covid-19 – with a degree of increased optimism around turnover, profits, jobs and investment.
The Latest Manufacturing Barometer reveals a more upbeat picture as the sector emerges from lockdown, but there is still a long way to go.
The previous report, surveyed in April as the Covid-19 crisis intensified, showed plummeting sales and production volumes, and 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’s clear that difficult times still lie ahead.
Conducted by SWMAS (South West Manufacturing Advisory Service) and the Manufacturing Growth Programme (MGP), the report reveals that:
More than three-quarters of firms (76%) saw sales drop in the past six months, with almost half (48%) still predicting sales to decrease between now and the end of the year.
More encouragingly, 40% of those questioned are expecting future sales to increase, which is a significant improvement on the 9% who predicted this back in April.
More than a third (39%) describe their current status as static or growing, with some businesses reporting very little change since the Covid-19 crisis, and some have experienced an increase in demand.
However, others have seen their customer base almost vanish overnight, and 59% of respondents describe their current status as “surviving” or “recovering”.
In April, only 16% of respondents thought that the government support on offer was sufficient to survive the crisis.
This survey confirms that the same percentage (16%) have already taken additional steps, above and beyond the support from government, to protect their cashflow, and a further 29% identify a need for more financial help going forward.
Only 32% of SME manufacturers surveyed have taken advantage of the Coronavirus Business Interruption Loan Scheme (CBILS).
Although 80% of manufacturers have utilised the Furlough scheme to retain employees, more than a quarter have already been forced to make redundancies, with 36% businesses expecting to make further cuts 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.
Protecting cashflow is of continued importance as manufacturers move out of lockdown. Despite a third (33%) of businesses expecting profits to grow over the coming six months, almost half (48%) still expect profits to fall further between now and 2021.
*All images courtesy of Shutterstock