Member Article

West Midlands worst hit region for manufacturing sales during Covid-19

The West Midlands is the worst hit region in England in terms of manufacturing sales due to the Coronavirus pandemic, a new report has revealed.

Research carried out by the Coventry and Warwickshire Local Enterprise Partnership (CWLEP) Growth Hub’s weekly SmartRegion report from May 5-11 has highlighted that over 6,800 businesses in Coventry and Warwickshire and a significant number of jobs could be facing major threat within a month without further financial help.

The research was collected from the CWLEP’s business engagements and survey data, MakeUK, the leading Manufacturers’ organisation, Warwickshire County Council, Coventry City Council, the Coventry and Warwickshire Chamber of Commerce and the Federation of Small Businesses to provide an updated view of the region’s business community for local and central Government.

The Growth Hub found 45 per cent of Advanced Manufacturing and Engineering businesses stated funding and financial support as the number one area of support needed to help them through Covid-19, although the information was gathered before the latest changes for furlough arrangements.

The weekly report has highlighted 89 per cent of manufacturers in the West Midlands have reported a decrease in sales due to Covid-19, which is the worst hit region in England, according to MakeUK.

Make UK’s latest Manufacturing Monitor found that 87 per cent of manufacturing companies have continued trading to some extent during the pandemic, with one in five companies furloughing a quarter of staff and a third of companies waiting to see an increase in orders before taking staff off furlough and getting them back to work.

Make UK data indicates that almost two-fifths of manufacturers don’t expect trading conditions to return for normal for six to 12 months after the Covid crisis ends and a further 17 per cent say it will take over a year to recover.

Stark statistics from the Office for Budget Responsibility (OBR) warn that Britain’s manufacturing sector will take one of the biggest Covid-19 hits financially across UK industry with output expected to fall by 55 per cent in the second quarter of this year. The research shows AME businesses are primarily affected by cash flow issues, decreased sales and major supply chain issues.

Businesses have also had problems with insurance since they are unable to claim cover due to the lack of clarity around insurance guidance. Further concerns are around consumer confidence and logistical barriers to trade.

Craig Humphrey, managing director of the CWLEP Growth Hub, said Advanced Manufacturing and Engineering businesses have welcomed the extension of the furloughing scheme until October since it is likely to enable businesses to stagger the return to work of their employees as they start to reinstate full operations.

“The research in the Advanced Manufacturing and Engineering sector is another stark reminder of the tough times that all industries are experiencing and that more help is needed in the West Midlands to prevent sales falling further in the coming weeks and months,” he said.

“A further consideration is that some social distancing restrictions are likely to remain in place for much of 2020.

“Businesses across all sectors need further guidance of the nature of any revised restrictions post lockdown and any Personal Protective Equipment that may need to be worn by staff to make preparations, although three in five businesses are saying they will need less than one week to organise their re-opening.

“There may be a need for additional measures to help rebuild consumer confidence and stimulate demand.”

This was posted in Bdaily's Members' News section by Matt Joyce .