Manufacturers in the North West are asking for a fresh support package from the government, saying the coronavirus pandemic may lead to, “significant redundancies”.
Head of the North West division of manufacturers’ organisation, Make UK, June Smith, said that Chancellor Rishi Sunak needed to call an emergency budget to offer a lifeline to the sector which is recording record levels of low output.
The dour statistics, which show manufacturers in their worst position since the financial crisis ten years ago, were illustrated in the latest Make UK/BDO Q2, Manufacturing Outlook survey.
Make UK has already called on the government to step in with direct support for strategic sectors of manufacturing, especially aerospace and automotive on which the North West is heavily dependent, in addition to the setting up of a National Skills Task Force.
Given the extent of the damage to manufacturing and its long supply chains, however, it is now urging the government to go even further and provide immediate respite to company cash-flow problems without which, it fears the prospect of major redundancies.
Ms Smith said: “There is no disguising the fact these figures make for awful reading with the impact on jobs and livelihoods across the region. Industry and Government must now leave no stone unturned to retain as many key skills as possible within the sector to ensure it is in a position to effectively recover when growth eventually returns, which at some point it will.”
According to the Manufacturing Outlook survey, order levels and output reached balances of -65% and -60% respectively. These levels are unprecedented.
Despite government support schemes, such as the Job Retention Scheme, Make UK dreads the prospect of major job losses due to a fall in demand despite the employment balance in the North West, at -10%, being better than the national average.
Make UK is predicting that manufacturing will contract by almost 10% in 2020 (9.4%) before recovering with the growth of +6.2% next year. It is also forecasting that the overall economy will contract by 7.8%, before recovering most of this in 2021 with a growth of 7.2%.
Graham Ellis, head of manufacturing at accountancy firm BDO in the North West, added: “With output plunging and order books shrinking, many manufacturers in the region have had to ditch their investment plans and rethink their priorities. While the short-term support packages offered to date have provided a lifeline, it’s becoming increasingly clear that the Government needs to develop a comprehensive strategy to provide long term stability for the manufacturing sector.”