Survey highlights fears of Covid-Brexit double whammy

Brexit will have a negative impact on England’s SME manufacturers ability to recover from the pandemic, according to the findings of the latest Manufacturing Barometer.

The report, which gathered intelligence from 409 companies across the country, revealed that uncertainty is still holding many management teams back, with 47 per cent admitting they have no idea how the transition out of the EU will affect their business.

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This worrying message is reinforced by an industry that is still besieged by Covid-19 and living with constant changes to the way they operate. A total of 62 per cent of respondents are still trading below pre-pandemic levels, whilst more than a quarter feel it will take between one and five years to get back to normal.

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Conducted by the SWMAS (the South West Manufacturing Advisory Service) and the Manufacturing Growth Programme (MGP), the survey is the largest of its kind in England and highlighted that nearly half of SMEs are still not convinced that the financial support currently in place will be enough help them survive Covid-19.

When asked about the financial assistance they require now, the top answer from 43 per cent of respondents was grants towards capital investment. This shows an appetite to spend, in order to improve productivity and achieve more sales, but indicates that further support is still needed to make this happen.

Nick Golding, managing director of SWMAS, commented: “SME manufacturers have been battered by Covid-19 and now they have the additional challenge of recovering with Brexit looming large on the horizon.

“Our findings tell us that the majority of firms do not think the transition from the EU will be a positive for their business and more support will be required to help them adjust to the new trading conditions, whatever they eventually look like.”

He continued: “Many manufacturing firms will be affected by issues, such as information transfer from Europe and new labelling requirements, even if they only supply into the domestic markets. The message is clear, businesses will need to regularly review the government transition support page for further clarity as and when it is published.

“There are some positives in the findings. Nearly a quarter of companies have seen an increase in trade and a further 14 per cent say that sales have not been affected by Covid-19. This highlights the innovation of our SMEs and their ability to adapt in order to supply customers in new markets.”

The Manufacturing Barometer, which is used to inform future government industrial policy, highlighted a general recovery in performance from England’s small to medium-sized manufacturers.

Over a quarter (28 per cent) of companies have increased sales between April and September as the marketplace has picked up slightly, with 40 per cent predicting growth over the next six months.

Encouragingly, nearly a third are expecting to recruit more staff and similar numbers (38 per cent) are committing to investing in their business – a seven per cent increase from the number who predicted this in July’s Barometer. This reinforces the fact that a number of SME manufacturers are prioritising investments now to enable growth going forward.

According to Martin Coats, managing director of MGP, the main priority area for investment identified by companies is automation, followed closely by skills development, product diversification, and support to enter new markets.