SME manufacturers show lack of confidence in government support

Posted on 27 Apr 2020 by Jonny Williamson

Small to medium-sized manufacturers in England are calling for greater and faster financial support from the government as they confront falling sales, production volumes and the prospect of job cuts amid the ongoing Covid-19 pandemic.

Covid-19 has been particularly problematic for the manufacturing sector given that, for the most part, production can’t be carried out remotely. This has been felt most acutely by the sector’s small and medium-sized enterprises (SMEs).

The current restrictions and ongoing lockdown measures mean that capacity is dramatically reduced and there’s been a sharp fall in production volumes.

The latest Manufacturing Barometer, which surveyed more than 600 firms across England, reveals a stark picture of how the virus is affecting industrial confidence, with almost nine out of 10 respondents (85%) predicting a drastic decline in production volumes and a similar number expecting sales to drop over the next six months.

1 Manufacturing Barometer - MGP SWMAS APRIL 27 2020

Conducted by South West Manufacturing Advisory Service (SWMAS) and the Manufacturing Growth Programme (MGP), the research also shows that more than half of firms (55%) 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 (84%) say they require urgent financial support to get through the coming months, with only 16% confident that the government is doing enough to help the sector cope with the pandemic.

Simon Howes of SWMAS commented: “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.”

Ventilators, gowns and masks

The Manufacturer has been compiling a list of every UK manufacturer helping to produce PPE and equipment for NHS workers, which currently stands at more than 100.

The latest Manufacturing Barometer reflects a positive response from UK manufacturing to support the urgent request for vital medical equipment and PPE.

Just over a fifth (21%) say they have already responded to the government’s call, with a further 13% willing to access advice on how to switch their production lines.

Other key finding in the Manufacturing Barometer, include:

  • 84% of SME manufacturers have seen an impact on staff attendance due to the Coronavirus outbreak, with 82% saying that their supply chains have also been affected
  • More than half 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
  • One in four manufacturers highlight the need for supply chain support, while 22% are looking for help with risk management and strategic planning