Almost two-fifths (37%) of manufacturers don’t expect trading conditions to return for normal for 6-12 months after COVID crisis ends. And further 17% say it will take over a year to recover
Stark statistics from the Office for Budget Responsibility (OBR) warn that Britain’s manufacturing sector will take one of the biggest COVID-19 hits financially across UK industry with output expected to fall by 55% in the second quarter of this year
Previous levels of output can only return with the creation of demand from the reopening of all retail outlets including vehicle facilities to boost automotive, and for nervous consumers to get back to normal spending patterns to provide a market for the goods produced right down the manufacturing supply chain.
Today as we publish our 3 point plan – Manufacturing our road to recovery – we call on Government to allow manufacturers the time to scale up operations and recover by extending the Coronavirus Job Retention Scheme in a more flexible form - utilising part time or short time working patterns - during the critical rebuilding phase.
This would work in tandem with a series of other measures to stimulate demand to truly get manufacturing and the UK’s economy back on track.
1.Boost economic support:
Introducing a scheme for old IT, plant and machinery equipment to incentivise firms to invest in new technologies that will increase automation, productivity, output and exports.
A wheels to work scheme to support the rent/purchase of bicycles, mopeds etc. for rural commuters if there are few public transport alternatives or if social distancing prevents public transport provision.
Retail Online Vouchers - to help small and micro enterprises get online. The vouchers would help companies to sell their goods and services online during this difficult period alongside a package of incentives and regulatory reforms to encourage greater use of delivery robots and drones to help SMEs meet demand for their goods in a safe way.
2. Ensure a safe return to work:
Access to PPE for employees without in any way denying supply to the NHS, care sector and other essential service.
Greater flexibility of the Job Retention Scheme (JRS) to allow workers with health and safety skills that are vital to re-starting production, to be returned to the workplace in a staggered way and help prevent a delays to manufacturers’ production cycles.
HSE review into wider workplace regulations to see what might be sensibly amended so as to allow differential operation during this unusual period.
3. Build resilience
A comprehensive supply chain mapping project: to ensure we have a greater understanding of their vulnerabilities, including transport/logistics.
Additional fiscal incentives to ensuring critical industrial R&D capacity and spend is safeguarded.
A Global Supply Chain resilience programme: which keeps markets open and predictable.
Download 3 point plan – Manufacturing our road to recovery here
Industry welcomed the initial critical financial support from Government but now as we move into the recovery stage the right response is to focus on supporting the business sector with measures designed to stimulate demand and ensure manufacturers can get back to supplying the goods consumers want and our country needs.
We are calling for a flexible recalibration rather than a cliff edge shock by allowing the Job Retention Scheme to continue its support but in a way that enables manufacturers to get back to work in a way that lets them recover as they bring staff back as order books grow and production levels and supply chains to return to normal.
It is likely that an immediate end to the JRS for manufacturers timed simply to coincide with the easing of lockdown arrangements would be highly premature and could have devastating effects on employment levels within manufacturing. A more sophisticated, flexible and tapered approach to this funding would have a huge positive impact on confidence and help ensure that the sizeable national investment already made in the JRS was maximised and not wasted.
