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General engineering was one of the three worst-hit sectors dealing with decreased orders, according to the Manufacturing Growth Programme (MGP). Sixty-four per cent of 289 respondents to its survey said orders had dropped owing to the pandemic, with furniture and software the other two worst-affected areas.
A similar number (59%) are reportedly experiencing issues with their suppliers. Nearly two-thirds have seen delivery times lengthen, while 40% saw an increase in costs, including products, materials and services.
According to the MGP, the supplier issues and depleted workforce means more than half of small and medium-sized manufacturers have taken additional loans since March to help them manage Covid-19 disruption.
Worryingly, only 11% of respondents felt that Brexit would offer a positive outcome for their businesses.
“The results raise important questions about resilience, both up and downstream for small manufacturers, particularly given the uncertainties in the economy,” said MGP managing director Martin Coats.
“Everyone was aware of the drop in orders due to the national lockdown and global issues, but what hasn’t been so well documented is the production problems some companies are facing and how disruption is causing major issues with pricing, costs and delivery performance.”
He added: “What this tells us is that the government urgently needs to look at more targeted support for the supply chain if we are going to see a sustained recovery in manufacturing.
“Brexit is also adding to the uncertainty, with nearly a quarter feeling it will have a negative impact on their operations. Thirty-five per cent were not sure one way or another, reflecting a general malaise when it comes to discussing negotiations on the UK leaving.
“Only 10% of total sales amongst our 289 respondents was exported to the EU, posing the question of whether it is as big a market for SMEs as we first thought.”
The government and European Union-funded MGP is the UK’s largest business support programme aimed specifically at small and medium-sized manufacturing companies. For more information or to download the report, click here.
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Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.