Industry lows & highs
16 June 2020
In the week that saw figures released confirming a record fall in GDP of 20.4% in April, and the Make UK/BDO Manufacturing Outlook Q2 survey showing the balance for output reached the lowest level in the survey’s thirty year history, UK industry has undoubtedly been taken to its foundations by the coronavirus pandemic.
The survey conformed that both UK and export orders plunged and while the furlough scheme appears to have mitigated the worst impact of immediate redundancies, evidence suggests that without government intervention to free up firms to invest again this has merely delayed large scale redundancies in addition to those already announced in the aerospace and automotive sectors.
Given the outlook for the rest of the year and into 2021, Make UK is calling on the Government to work with business and other key stakeholders from across the UK on a National Recovery Plan. In the short term this should begin with an immediate stimulus package beginning with an immediate Business Rates holiday for manufacturers similar to that granted to the retail sector earlier this year. Make UK believes this would be the single most important measure the Chancellor could introduce having the quickest impact for companies of all sizes and across all sectors.
This should be accompanied by other immediate measures including a National Infrastructure Strategy with a commitment to immediate projects to help supply chains, a car scrappage scheme and incentives to invest in digital technology and skills. Make UK also re-iterated its previous call for Government help for recapitalisation to direct support at key sectors and companies, in particular to allow companies to access capital to service debt incurred during the lockdown.
Interestingly, while manufacturing has taken this huge hit, its image has in gone up in the estimation of the UK public – boosted by the way in which agile businesses stepped up the challenge of providing much needed ventilators and PPE. In fact, according to the latest data from Attitudes to UK Industry, 74% believe that a strategic long-term plan for helping UK manufacturing to be more productive and competitive will help insulate us from future pandemics and go some way to protect UK GDP, of which manufacturing contributes over 17%. Furthermore, three quarters of the UK public believe more strongly in the importance of the UK manufacturing as a result of coronavirus.
Like any crisis, as well as wreaking havoc, the pandemic has created opportunities and will continue to do so. The idea of re-shoring has gained prominence as vulnerabilities in supply chains have been exposed. Many businesses are having to rethink processes that they have had in place for years - so what better time is there make improvements. Of course there will be huge financial strain, but for forward thinking enterprises, a post-pandemic world could be a very different place, boosting productivity, social responsibility and environmental benefits.