Supply chain issues set to stall SME manufacturing recovery

UK businesses impacted by 'food and staff shortages' says chief

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The Manufacturing Barometer, run by SWMAS (South West Manufacturing Advisory Service) and supported by the Manufacturing Growth Programme (MGP), is signalling that almost half are struggling with price changes. Firms believe that rising costs are being driven by lack of raw materials availability, rising transport costs, and reduced capacity in the market to meet demand. Some 49 percent say they are struggling to find staff as they attempt to scale back up following the pandemic. 

 “Confidence appears to be levelling off,” says SWMAS managing director Nick Golding.

“We are seeing the first signs of supply chain struggles starting to hinder the upturn. Freedom of movement is adding to recruitment pain, while problems securing raw materials seems to be partly due to logistics challenges of importing goods. 

“Companies are taking steps to increase and protect their own inventories, often paying extra to get what they need. Firms are having to compete for scarce resources, which is driving the significant price increases we are seeing.

“It’s vital that SMEs in our sector receive guidance and support to help them address these issues and ensure the recovery is not impeded.”

The Barometer is the only quarterly survey specifically aimed at SME manufacturers in the UK. The latest report also suggests that firms are trading at increased levels when compared to their pre-Covid position and there are predictions of job creation and increased future investment. 

MGP managing director Martin Coats added: “We have all been encouraged by the pace of our recovery, which just goes to show the strength and agility of our manufacturing SMEs.

“However, it is not without substantial challenges in the supply chain, most noticeably in the ability to get the staff and materials needed to produce parts. The latter is the biggest concern, which isn’t surprising when we’re hearing accounts of some lead times increasing from three-weeks to 12 months.

“Recruitment continues to be a significant worry which may ease once furlough decisions are taken, but there’s still a wait for this to happen and we’re not sure manufacturers can go that long.”

The Manufacturing Barometer’s team believes there are some immediate measures that the Government can introduce to ease some of these challenges and will be presenting the report’s findings to ministers. For more details visit the website.

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