MGP: UK Manufacturing Suffers From Supply Chain Hindrances

By Oliver Freeman
SMEs in the UK manufacturing industry are stuck between a rock and a hard place with a drop in demand and weaker supply chain networks...

In a recent study titled SME Manufacturers and the COVID Crisis, conducted by Manufacturing Growth Programme (MGP) and Oxford Innovation, the strain on UK manufacturers wallets’ has been revealed. Since March, disrupted supply chains, along with the strain of managing production levels with minimal workforces, has resulted in more than half of small and medium-sized enterprise (SME) manufacturers taking out additional loans to keep the cogs turning. 

The Respondents

Of the 289 respondents to MGP’s study, 64 percent stated that their orders had dropped as a result of the pandemic, with furniture, software, and general engineering taking the brunt of the blow. Similarly, 59 percent claim to have experienced, or be experiencing issues with their suppliers; nearly two-thirds of the contributors had seen elongated delivery times, whilst 40 percent had seen an increase in costs including products, materials, and services.

All these changes and the tumultuous waters that manufacturers have had to navigate throughout the COVID-19 period, plus the coming changes as a result of the potential outcomes of Brexit trade negotiations, have been the contributing factors to the new and unfortunate trend of acquiring additional capital to stay afloat. 

“The results raise important questions about resilience, both up and downstream for small manufacturers, particularly given the uncertainties in the economy,” explained Martin Coats, managing director at the MGP. “Everyone was aware of the drop in orders due to the national lockdown and global issues, but what hasn’t been so well documented is the production problems some companies are facing and how disruption is causing major issues with pricing, costs and delivery performance.”

He continued: “What this tells us is that the Government urgently needs to look at more targeted support for the supply chain if we are going to see a sustained recovery in manufacturing.

“Brexit is also adding to the uncertainty, with nearly a quarter feeling it will have a negative impact on their operations. 35% were not sure one way or another, reflecting a general malaise when it comes to discussing negotiations on the UK leaving.

Only 10% of total sales amongst our 289 respondents was exported to the EU, posing the question of whether it is as big a market for SMEs as we first thought.”

The MGP

The Manufacturing Growth Programme, which is funded by the European Regional Development Fund (ERDF) and delivered by Oxford Innovation Services, is currently classed as “the UK’s leading and largest business support programme, aimed specifically at manufacturing SMEs.” 

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