Partner Article

Call for ‘Minister for Manufacturing’ as latest report points to ‘cocktail’ of supply chain issues for industry

A complex cocktail of supply chain pressures, availability of raw materials and recruitment issues is holding back UK industry according to a new report.

Crowe’s Summer Manufacturing Outlook, conducted in partnership with the Confederation of British Metalforming (CBM), revealed a mixed picture of optimism and the potential for reshoring, yet management teams continuing to be plagued by long-running supply and labour issues.

88% of respondents admitted suffering from the price and availability of raw materials, whilst over three quarters had experienced supply chain issues caused by the war in Ukraine, high inflation and ongoing issues with Brexit.

Adding to the difficulties is the shrinking labour pool, with 76% of manufacturers coming to terms with recruitment issues – a difficult balancing act when many firms are exploring new opportunities or scaling up following the pandemic.

According to Stephen Morley, the President of CBM, the results in the report reinforce the growing call for a ‘Minister for Manufacturing’, someone who can work with industry to overcome these challenges and ensure the sector is represented when key decisions are being made.

“A strong and well supported manufacturing sector has a major part to play in the UK economy’s GDP and should be a cornerstone to build on for any government, whether it be this one or the next,” explained Stephen.

“We represent over 200 members involved in the manufacture of fasteners, forgings and pressings, cold-rolled and sheet-metal products – the real building blocks of industry.”

He continued: “There is a unanimous feeling that our voices are not being heard, with EU funding disappearing, the lack of an Industrial Strategy and a business support landscape that is ‘piece meal’ for conglomerates with little or no help for what our companies require, especially SMEs.

“The call for a ‘Minister for Manufacturing’ is growing and we need the powers that be at Whitehall to act sooner rather than later.”

The Manufacturing Outlook Summer Report has now become a fixture in the industrial calendar and is completed by Audit, Tax, Advisory and risk firm Crowe, supported by the Confederation of British Metalforming.

It aims to provide a timely snapshot of the UK manufacturing market with the results used to inform and lobby Government and to help shape industrial decision-making by the sector.

Other key findings, include: • 66% say import costs have risen in the past 12 months • 69% of businesses are considering reshoring • 31% say Brexit has reduced international trade • 35% export less because of levies, duties and admin • HMRC scrutiny prompts scale-back of R&D claims • 43% of firms are on energy deals greater than the current market rate

Stephen Morley continued: “Manufacturers are paying more for their energy than they should be, especially those who fixed contracts last Autumn, with some under duress due to ‘questionable sales practices’. They are now locked into unfair deals that are hurting their businesses and, in some cases, their long-term liquidity’.

“This situation could get worse, as those who have been protected by long-term deals taken out before the energy crisis will soon have to renew. They will be faced with a significant increase in costs, which, when added to spiralling wage bills and supply chain pressures, is an unpalatable cocktail for business owners.”

Johnathan Dudley, Partner and Head of Manufacturing at Crowe, commented: “Pent-up demand post-Covid has fed through to resilient financial results for UK manufacturers. Supply challenges remain, however, and the costs and administrative burdens of importing may drive a reshoring trend which brings environmental benefits too.

“Businesses face no shortage of challenges, including recruiting and retaining skilled workers, but a looming election provides hope that there is, on the horizon, potentially greater support and recognition of regulatory barriers for manufacturers and the vital role they play in the UK economy.

“Indeed, we are joining with the Confederation of British Metalforming by calling for a dedicated ‘Minister for Manufacturing’ to help unlock the sector’s potential and allow UK plc to benefit.

“For true ‘thrival’, manufacturing organisations must look beyond the immediate hurdles and seek out opportunities, whether that be through a strategic change of approach, or more actively pursuing supply chain opportunities attached to large infrastructure projects such as Hinckley Point or HS2.”

He concluded: “In fact, our report asked about the ‘HS2’ opportunity. 43% of companies said they believed there was potential to be involved, yet only 27% of respondents visited the HS2 Supply Chain website.”

To download a copy of the report, please visit https://www.crowe.com/uk/industries/manufacturing/manufacturing-outlook-report

This was posted in Bdaily's Members' News section by Russ Cockburn .