Manufacturing Barometer shows worrying trends

Written by: Andrew Wade | Published:

Pricing issues, supply chain and recruitment have all been highlighted as significant problems being faced by SMEs in the latest Manufacturing Barometer report.

The survey, which is run by the SWMAS (South West Manufacturing Advisory Service), polled 260 executives from SMEs across the UK. Virtually all respondents (96 per cent) reported pricing increases across their supply chains, with 94 per cent citing lack of raw materials as a root cause and 82 per cent naming transport costs as a factor.

According to the report, the costs of materials have increased by as much as 350 per cent in some areas. The issue is being compounded by longer lead times and the expense of additional stockholding, with some manufacturers having to resort to last-minute material substitutions when supply chains have failed to deliver.

Recruitment is also proving to be a problem for many manufacturers. Almost half (49 per cent) of those polled said they were struggling to fill positions as economic activity ramped up in line with the COVID vaccine rollout and easing of restrictions.

“It appears we are seeing the first signs of supply chain struggles starting to hinder the upturn,” said Nick Golding, managing director of SWMAS. “Freedom of movement is adding to recruitment pain, whilst problems securing raw materials seems to be partly due to logistics challenges of importing goods.

“To address this, companies are taking steps to increase and protect their own inventories, often paying extra to get what they need. Firms are having to compete for scarce resources, which is driving the significant price increases we are seeing.

“The challenges highlighted have been caused in part by government policies as a direct result of Brexit and the COVID-19 pandemic. It is a vital priority that SMEs in our sector receive guidance and support to help them address these issues and ensure the recovery is not impeded.”

In spite of the multitude of challenges faced by the manufacturing sector, the report also revealed that 42 per cent of firms are trading at increased levels compared to their pre-COVID position, while 51 per cent expect staff numbers to increase in the near future, with just six per cent expecting job losses.

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