SMEs call for more government support amid COVID-19 pandemic

Updated: Apr 28, 2020

Small to medium-sized (SME) manufacturers are calling for greater and faster financial support from the government as they confront plummeting sales, production volumes and the prospect of job cuts amid the ongoing COVID-19 pandemic.

The latest Manufacturing Barometer, which surveyed over 600 firms across England, reveals 9 out of 10 respondents are predicting a drastic decline in production volumes and a similar number (85%) expecting sales to drop over the next six months.

Conducted by South West Manufacturing Advisory Service (SWMAS) and the Manufacturing Growth Programme (MGP), the report also shows that 55% of firms 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 in the current climate, with only 16% confident that Government is doing enough to help the sector to cope with the pandemic.

Simon Howes, of SWMAS, said: “COVID-19 is having a huge impact across the UK economy but it is especially problematic for our sector as manufacturing cannot be carried out remotely, relying as it does on physical interaction with machinery and parts.

“Current restrictions and the ongoing lockdown measures mean that capacity is dramatically reduced, and therefore the majority of businesses are reporting an unprecedented fall in production volumes.

“Top of the support wish list for SME manufacturers is 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 the overseas supply of strategically critical items. We must learn from this and re-establish UK production of these things. We must protect SME manufacturing now to ensure it is ready to spring back into action once the COVID-19 crisis is finally over.”

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%) of firms surveyed say they have already responded to the Government’s call, with a further 13% willing to look at diversification if they can access advice on how to switch their products and processes.

Other key findings in the Manufacturing Barometer include:

  • Some 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 this year

  • One in four manufacturers highlight the need for supply chain support, while 22% are looking for help with risk management and strategic planning

Martin Coates, managing director of the Manufacturing Growth Programme, said: “It is no great surprise to see that every indicator for confidence among SME manufacturers appears to have worsened over the last six months due to the impact of COVID-19.

“That said, it is heartening to see that many SME manufacturers are adapting to the situation by diversifying their processes and product ranges in all manner of innovative ways.”

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