Right now, UK manufacturers are trying to navigate two major impacts to their industry:
- The COVID-19 pandemic, and
Dealing with COVID-19
According to Make UK, 40% of all manufacturers have experienced difficulties sourcing components and a further 49% anticipate future difficulties.1 For materials that are high in demand this can increase the price and affect supply chain as manufacturers need to find alternative supplies.
UK manufacturers have also reported weak orders2 which will surely affect profits. Preserving cash for new investments and innovations is now a top priority as manufacturers await a UK government strategy that will deliver long-term stability for the sector. In the meantime, insolvency presents a real risk for manufacturers. Trading whilst insolvent is a serious issue and manufacturers risk breaking the law if they do so. In addition, directors may become personally liable for company debts and possibly face being disqualified from being a director for up to 15 years.
Thriving and surviving in a world that’s vulnerable to major macroeconomic events depends on thinking and working smarter. Firms may want to prepare to reconfigure business models and factory floors – and embrace new robotics and connected Internet of Things (IoT) digital technologies that will deliver enhanced insights and agility to their operations.
Preparing for Brexit
Findings from the 2019 MHA Manufacturing and Engineering annual report3 reveals that 61% already had a Brexit strategy in place. Yet, there is a fear that too many manufacturing companies are sitting back and waiting for a deal between the UK and EU. There is plenty of paperwork that needs to be completed regardless of the deal.
There are new rules for businesses and citizens from 1 January 2021. You need to act now if you’re:
- Importing goods from the EU
- Exporting goods to the EU
- Travelling to the EU
- Living and working in the EU
- Staying in the UK if you’re an EU citizen4
Advice to manufacturers is don’t waste time. Get on to the Government website and understand what you need to do regardless of a deal or not.
Brexit may also see businesses shoring their business and buy back into Britain. However, this means that they need to be able to access and maintain a skilled workforce that can help them adopt new industry 4.0 innovations. Yet only one-third of firms are confident they will be able to access the digital skills they need in the years ahead.5 It takes time to attract labour force to the industry, recruit and train them.
One thing we do know is that UK manufacturers are adaptable and find ways around problems. So when it comes to prioritising long-term recovery over short-term survival, transforming for success will require a deep understanding of how to manage and mitigate risk.
1 Make UK, June 2020
This is a marketing communication MC201123305