The latest South West Manufacturing Barometer reveals a more upbeat picture as the sector emerges from lockdown, but there is still a long way to go.
This quarter's report shows that the SME manufacturers across the South West are bouncing back from the worst effects of COVID-19 – with a degree of increased optimism around turnover, profits, jobs, and investment.
The previous report, surveyed in April as the COVID-19 crisis intensified, showed plummeting sales and production volumes, and the probability of deep job cuts throughout the sector. Three months on, the latest report reveals that while the key indicators remain in “negative territory”, manufacturers are slightly more optimistic about their prospects over the short and medium-term. However, it is clear there are still difficult times ahead for the manufacturing sector.
The report reveals that almost three-quarters of firms (70%) saw sales drop in the last six months, with 42% still predicting sales to decrease between now and the end of the year. More encouragingly though, 44% of those questioned are expecting future sales to increase, which is a massive improvement on the 10% who predicted this back in April:
41% of respondents describe their current status as static or growing, with some businesses reporting very little change since the COVID-19 crisis, and others experiencing an increase in product demand. However, others have seen their customer base almost vanish overnight, and 58% of respondents describe their business’ current status as ‘surviving’ or ‘recovering’, which shows the majority of SME manufacturers are still facing significant challenges:
Although 80% of manufacturers have utilised the Furlough scheme to retain employees, it is concerning that almost a third of businesses (32%) are still expecting to make further cuts to their workforce within the next six months. This coincides with the end of the Furlough scheme in October and shows a need to bridge the gap further until manufacturing is able to operate at full capacity once again:
On a positive note, our survey shows that manufacturers across the South West have been busy adapting their businesses as necessary over the last three months; restarting and increasing production, identifying new customers and suppliers, upskilling existing staff, and developing new products and processes in an attempt to overcome current challenges. However, responses indicate a need for further support as the sector continues to recover over the coming months.