Over a third of SMEs have extended asset life due to supply chain constraints

Posted on 24 Nov 2023 by The Manufacturer

Over a third of SMEs have operated a machinery asset for longer than planned due to supply chain issues impacting the availability of new variants, Paragon Bank research has revealed.

The survey of over 500 SMEs by Opinium showed that 36% of firms are operating a machinery asset for longer than planned, with a quarter (26%) running commercial vehicles for longer than anticipated.

Just under a third (31%) have refinanced an existing machinery asset, with 38% acquiring pre-owned assets due to the lack of availability of a new option.

Manufacturers were more likely to use an existing asset for longer than planned, with 41% of firms experiencing this. Operating assets for longer than anticipated was also common in the transport and logistics (36%), agriculture (34%) and construction (31%) sectors.

The research showed that firms are now looking to address the issue through new investment – four in ten businesses (39%) are planning to acquire new machinery assets in the next six months, with a further 36% considering investing.

Over a third (35%) are planning to invest in other equipment, with 28% seeking to acquire new HGVs and 20% LCVs.

Four in 10 (41%) of those businesses planning to invest in new machinery assets anticipate spending between £200,000 and £500,000, with a fifth (18%) of businesses planning to spend between £100,000 and £200,000. A similar proportion plans to spend between £50,000 and £100,000.

SME Lending Sales Director, Stewart Good said: “Although easing, the aftereffects of the pandemic are still being felt and supply chains are still not operating at optimum levels. This makes it more challenging for SMEs to acquire the assets they need to grow their businesses and we have seen more firms resorting to operating plant and machinery longer than originally planned.

“As supply chains are normalising, we’re now seeing stronger demand from customers to start replacing these assets. Equally, businesses are releasing cash from these assets by refinancing.”

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