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20.07.2020

Survey shows redundancy plans escalating and prospects for normal trading receding

Britain’s manufacturers are calling on the Government to extend the Job Retention Scheme for strategic industry sectors by six months in order to avoid the loss of highly skilled job losses in manufacturing on a scale not seen since the 1980s. These sectors are of critical importance to the long term health of the economy and their protection is an investment in our industrial future.

The call by Make UK comes on the back of its latest Manufacturing Monitor survey which shows that the number of companies planning to make redundancies in the next six month has risen to 53%. This has continued the sharp rise seen in the last three surveys over an eight week period, rising from 25% to 42% previously and comes despite a gradual improvement in sales and orders.

Almost a third of companies (32.3%) are planning to make between 11% and 25% of employees redundant with just under 8% of companies planning to make between a quarter and half their workforce redundant.

In addition, the proportion of companies expecting a return to normal trading to take twelve months or longer has risen from just under a third in the last survey to 42%, while just 15% of companies are now operating at full capacity. Almost a fifth of companies (18.8%) are operating between a quarter and half capacity and just under a third (31.8%) between a half and three quarters.

In response, Make UK wants the Government to extend the furlough scheme by six months, specifically for the automotive and aerospace sectors. In addition to being major employers directly, these high value sectors have long supply chains employing significant numbers of people, with many companies based in Regions highly dependent on their success.

According to Make UK forecasts, the Motor Vehicles sector is forecast to lose 34% of its Gross Value added this year while Other Transport, which is mainly aerospace, is forecast to be 15% lower. 

Make UK also stressed that the call for specific measures for these sectors would only be equivalent to measures taken by major European competitors in Germany, France and Italy. 

For example, to date, the French Government has provided support, including loans, worth 15bn and 8bn euros to the aerospace and automotive sectors respectively while speculation suggests Italy will shortly announce a car scrappage scheme worth 1bn euros and a further 10bn euros to support ongoing furlough schemes across the economy. Germany has a 3,000 euro subsidy scheme to buy a new electric car whilst a 50bn euro package has been announced for research and innovation in new technologies such as fuel cells and hydrogen.

In tandem, Make UK also re-iterated its call for a National Skills Taskforce to be set up involving the trade unions and other key stakeholders to ensure key skills are retained and redeployed within manufacturing.

The survey covered 170 companies between 7 and 14 July. The data from the previous two surveys were from surveys at the end of May and mid June.

There is no disguising the fact these redundancy plans make for very painful reading. As well as the distressing personal impact on livelihoods across the UK, Industry cannot afford to lose these high value skills which will be essential to rebuilding our economy and investing in the industries of the future.

At present, the prospect of a V shaped recovery for Industry seems remote. Therefore, if we are to mitigate the worst impact of potential job losses Government must extend the furlough scheme for key strategic sectors to provide them with vital breathing space.

In addition, Government should consider measures similar to those introduced by competitors to boost demand in the aerospace and automotive industries in particular. These sectors are vital to the future of industry and are at the forefront of developing new technologies which will be essential to the success of our economy.

Stephen Phipson Chief Executive, Make UK
News / Make UK / Coronavirus / Media release