Member Article

Supply chain woes continue for North West businesses – BDO

Domestic and global supply chain issues continue to hamper the growth of North West businesses, according to the latest report from accountancy and business advisory firm BDO LLP.

The bi-monthly Rethinking the Economy survey of 500 mid-market businesses has revealed that nearly half of regional companies (47%) view supply chain disruption, such as delayed materials and a lack of supplies, as the biggest challenge over the next six months. This ranks ahead of supporting employees through the cost-of-living crisis (43%), with a third citing rising interest rates and the cost of borrowing (33%) as their number one concern.

The survey showed that the resurgence of COVID-19 in China, including ongoing lockdowns and a recent spike in cases, has caused renewed delays and made it harder for 40% of businesses to access goods or materials.

While ongoing supply chain issues are having the biggest impact on regional companies, rising business and material costs, such as higher rents and soaring energy bills, are also proving to be a real cause for concern. According to the Rethinking the Economy survey, more than a third of North West businesses (37%) said goods and raw materials have become more expensive, with the cost of importing and/ or transporting goods and materials increasing for 30% of those surveyed.

However, businesses in the region are taking a number of steps to deal with supply chain pressures and rising costs, with 38% admitting they intend to take on new debt or increase overdraft facilities. Nearly a third (31%) are having to absorb rising costs to keep prices the same, while supply chain issues have forced 28% of North West businesses to halt recruitment.

Ed Dwan, Partner and Head of BDO LLP in the North West, commented:

“Supply chain pressures and the rising cost of doing business have been enduring themes for North West businesses for many months, as they battle with ongoing geo-political and economic issues. The next six months will prove hugely important as they attempt to mitigate these effects by ramping up productivity in their business.

“With access to labour also hampering many businesses, it’s unsurprising that many North West companies are going to great lengths to keep the wheels turning, whether that’s by introducing flexible working hours (43%) or investing in upskilling or retraining staff (37%).”

The Rethinking the Economy survey showed that one in five North West businesses are providing other workplace benefits in direct response to the cost-of-living crisis, with 13% of regional companies intending to increase pay by between 5 and 9% as part of their pay and reward strategy in 2023.

Dwan added: “Mid-sized businesses are the UK’s economic engine and the heartbeat of our region. In the year ahead they must continue to show resilience and innovation in their approach to addressing important business issues, such as labour and productivity. However, they cannot do this in isolation. They must be given the right support to tackle ongoing challenges and help to drive both sustainable and responsible growth.”

According to the survey, nearly half of North West businesses (47%) intend to launch new products or services this year to support growth. This compares to 40% of businesses that plan to expand in the UK, in order to meet their strategic aims.

This was posted in Bdaily's Members' News section by Ian Jones .