Survival Finance – what’s really going on?

Posted on 5 May 2020 by Nick Hussey

It’s easy to bash the banks, but the UK's industrial sector is served by some excellent representatives that genuinely care for manufacturing and engineering businesses and are committed to support you at this time.

Nick Hussey spoke to a number of the key players and asked them what is really going on, what is available and, most importantly, how quickly are they putting new facilities in place?

The lockdown is truly unprecedented and no business plan will have envisioned such an immediate cessation of almost all economic activity.

The effect on manufacturing has been hugely diverse, ranging from extraordinary demand from supermarkets for basic food stuffs – which has placed enormous strain on food manufacturers, packaging companies, labelling suppliers as well as farmers, distributors and supply chains –  through to the complete and drastic emergency stop in automotive and multiple other sectors where social distancing is difficult.

Huge numbers of manufacturers both large and small are seeking support to help them navigate through lockdown and to a new, post-Covid-19 normal.

In the UK the banking sector is dominated by the’ Big Five’ – Lloyds, Barclays, HSBC, NatWest and Santander.

(Forget HSBC. In my 12 years plus at The Manufacturer I have never met or heard of anyone senior that is focused on, or interested in, our sector in any way. Their focus is on decorating airport walls as far as I can tell.)

Fortunately, the rest of the banks have very active, motivated and engaged senior representatives each responsible for teams of people across the UK with portfolios dominated by manufacturing and engineering businesses.

They know the sector well and you can see them in attendance at key industry events and supporting the sector in many different ways. Here they share some of their manufacturing-focused initiatives over the past few weeks.

David Atkinson, SME and Mid Corporate UK head of manufacturing, Lloyds Bank Commercial Banking

David Atkinson, head of manufacturing, Lloyds Bank Commercial Banking. “The ongoing concern is what all businesses fear – uncertainty. Without knowing how long the crisis will last, it’s difficult for manufacturers to plan and act accordingly.

“Our long-term commitment to the UK’s manufacturing sector remains unchanged. We are here to help so that manufactures can survive the current climate and be ready to rebound once things begin to stabilise.

“Back in January, we made a commitment to lend up to £18bn to UK businesses, including manufacturers in 2020, which we expect to honour. Then, at the beginning of the outbreak in the UK, we pledged a £2bn fund to provide for additional fee-free lending to SMEs, and capital repayment holidays for those worst affected. We’re also one of the accredited lenders for the government CBIL and CLBIL schemes.

“Worcestershire-based kitchen manufacturer Interfab was one of those who turned to us as their long-term banking partner. We were able to provide it with a five-figure CBILS loan to protect jobs and bolster its cashflow position during lockdown. It’s one of many manufacturers currently benefitting from our support.

“As always, we will continue to be by the side of manufacturers so they can come out of this as best equipped as possible for a bright future.”

Richard Hill, Head of Automotive and Manufacturing, NatWest:

Richard Hill, head of Manufacturing & Automotive, NatWest.“NatWest is actively supporting all our business customers and we are working tirelessly in getting help and support to those who need it.

“We know that the manufacturing sector is being severely impacted by the Coronavirus outbreak, but we also know that it is also making a major contribution in the fight against Covid-19 and helping to keep our economy going.

“This is why our dedicated sector specific Relationship Mangers and sectors team are focused on understanding and meeting the needs of our customers through this challenging time.

“We have moved quickly to ensure support schemes are in place, from being the first bank to announce support to our customers with a £5bn Coronavirus Working Capital Fund for SME customers to bringing the government’s CBILS scheme to market at pace, and so far providing nearly 50% of all CBILS loans.

“Our ‘Future Fit’ focus will ensure we can support our customers through this highly disruptive phase in the evolution of this sector, and our different extensive range of products and services can meet the needs of manufacturers and engineering firms of every size, no matter what stage of development the business is at.

“Our packages of support include the government-backed loans, capital repayment holidays and increased overdrafts. There is not one solution that fits all, which is why our experienced Relationship Managers are actively engaging with our customers, going above and beyond, to provide tailored support to meet an individual business’ needs.

“One example of a business we’ve helped support through this uncertain period is Bulldog Products Ltd, a family-run manufacturing company in Southport with 150 employees which produces balanced, nutritional pet and bird food. Government restrictions have meant that the business has had to briefly close its factory and warehouse, with a brief period of no production output and deferred orders from customers in the short term.

“We were able to provide the company with a CBILS loan of just over £1m to support the business through this difficult period and safeguard local staff. Bulldog Products Ltd’s Managing Director, Gill Howard, said that it’s “at times like this when a strong working relationship with your bank comes to the forefront. Fortunately, we have an excellent ongoing banking relationship and NatWest have assisted us greatly in this crisis by providing finance under CBILS.”

“We are also actively engaging and sharing our insight and knowledge across the sector, including with the government, Innovate UK, the High Value Manufacturing Catapult, trade bodies and business groups. Our understanding and presence in the sector enable us to share key insights on the issues faced by manufacturers with industry leaders and policy decision-makers.

“One area where the bank has been agile in its response to our customers’ needs in this sector is providing urgent finance to manufacturing companies who are directly contributing to the response to the Coronavirus outbreak. For example, we recently supported a manufacturing company with increased working capital to help it produce and deliver furniture and technology for the new, temporary NHS Nightingale hospital at the ExCeL in London.

“The manufacturing sector is pivotal to our economy, and as a purpose-led bank, we are here to support and stand by our customers to help them navigate the uncertain terrain posed by the Coronavirus outbreak, and well beyond.”

Lee Collinson, National Head of Manufacturing, Transport & Logistics, Barclays Corporate Banking:

Lee Collinson, National Head of Manufacturing, Transport & Logistics at Barclays Corporate Banking“Businesses across the various manufacturing sub-sectors are being impacted in different ways during the Covid-19 pandemic but the common themes across the sector have been disrupted supply chains, the challenges of operating factories within the confines of social distancing, and closed or heavily disrupted end markets.

“At Barclays, our large team of specialist manufacturing Relationship Directors have been working closely with their clients to assist them through this unprecedented situation by using government schemes such as CBILS as well as by providing additional liquidity support through such mechanisms as capital repayment holidays on term loans.

“A good example of this was the support Barclays provided to Newry-based sandwich, salad and snack maker, Around Noon via the CBILS scheme. The loan was approved quickly, which was also good news for Around Noon’s supply chain.

Howard Farquhar, Chairman of Around Noon said, “We work closely with over 100 companies across the UK and Ireland to provide us with over 1,000 ingredients and this money will ensure we are in a position to make timely payments to these suppliers over the next few months.”

“The government’s CLBILS will provide support for businesses with a turnover in excess of £45m. Already at Barclays we have agreed the first loans under this new scheme which will really benefit many manufacturers who were previously not eligible under the terms of the CBIL scheme

“Barclays remains fully committed to the sector and will continued to work closely with all our manufacturing clients to assist them in managing their businesses through the crisis in the best possible way.”

Paul Brooks, Head of UK Manufacturing, Santander UK:

Paul Brooks, Head of UK Manufacturing at Santander UK“The adaptability and agility the manufacturing sector has shown over the last few weeks has been outstanding.  We know how vital manufacturing is to the wider UK economy and its performance will have far reaching repercussions for the wider UK economy in the weeks, months and years to come.

“We have been really impressed by the response from the whole sector, the determination to adapt and change at speed has rightly been celebrated during these challenging times.

“Combating the fallout from Coronavirus is obviously our overriding priority right now. That’s why manufacturers need to be supported and protected financially and Santander UK is proud to participate in the government-backed support including the CBIL and CLBIL schemes in conjunction with the British Business Bank.

“Since launch, we have worked at pace to ensure we can deliver new loans and overdrafts to help UK manufacturers and their supply chains when they need us most.  We are also amending a lot of existing facilities and giving businesses repayment holidays for the next six months to help their cashflows through this unprecedented crisis.

“Every business is different, and every business is being impacted differently and we are focused on understanding the specific impact to our customer, offering them appropriate support and ensuring we remain responsible lenders.

“We’ve already helped thousands of UK businesses including many manufacturers with loans under CBILS as well as other financial and non-financial support.  We are working through many remaining requests and continue to receive new requests.  We are helping a large number of customers to understand how to access new lending and additional working capital, both through our usual products and the CBILS scheme.

“Alongside new lending and capital repayment holidays, we are also signposting other forms of government support and providing non-financial support such as tips to avoid scams and HR and employment law resources.

“For manufacturers feeling the strain and tackling adversity, there is help out there to navigate the ‘new-normal’ and our relationship teams would be happy to support you and your business.”

Finding the right financial partner

The Manufacturer has researched a list of banks actively supporting our sector at the current time.

You can find full details of who is willing to lend, and how to contact them here