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Confidence among SME manufacturers is at its highest level for two years

By Steve Banbury
22 June 2021
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Confidence among SME manufacturers in the South East is at its highest level for two years according to the latest Manufacturing Barometer, carried out by the Manufacturing Growth Programme (MGP) and SWMAS (the South West Manufacturing Advisory Service).

Nearly three fifths of firms are expecting to increase sales between now and October, with 57% indicating that they are planning to boost investment over the next six months as they look to the future. Out of 39 firms questioned, 54% highlighted an increased need to recruit staff over the coming months.

This quarter’s Barometer took an in-depth look at how manufacturing SMEs are recovering from the pandemic and, encouragingly, 44% of respondents now expect to return to, or exceed, their pre-covid-19 position within three months.

On the jobs front, although 72% of businesses have utilised the government’s furlough scheme at some point in the last year, only 36% are still using it today.

The report also reveals that new working practices are being implemented because of the pandemic. More than half of business leaders questioned are now planning to offer their employees some level of remote working, up 38% from the number who were offering this before the pandemic began.

Martin Coats, managing director of the Manufacturing Growth Programme, commented: “Small to medium-sized manufacturers in the South East experienced a positive quarter’s trade between January and March, with 44% reporting an increase in sales, compared to 21% in the previous barometer.

“While Covid-19 has been challenging, it has accelerated new ways of working, some of which have proven to be more effective.”

He continued: “Over half of manufacturers have said they will continue to offer some form of remote working going forward, which would have been unheard of fifteen months ago. These beneficial changes will offer employees more flexibility and, ultimately, a better work/life balance.”

“Firms often cite that recruiting skilled staff can be a challenge. With this in mind, it is vital that they understand the working practices offered by other employers across the sector to help them compete and attract the best talent. The intelligence within this quarter’s Manufacturing Barometer offers businesses a unique advantage in terms of supporting their future growth ambitions.”

While the Chancellor heralded his ‘business-friendly’ budget earlier this year, less than a fifth (18%) feel that the measures introduced will aid recovery. Nearly half of companies have said that they don’t think the budget will affect their recovery, which indicates that it may not be tailored to the needs of the manufacturing sector.

Coats added: “SME manufacturers are definitely feeling confident about the future, but there will still be a lot of challenges to overcome, not least the availability and lead times of material. The Government will need to consider future support to help the manufacturing industry navigate the coming months.

“In terms of digital infrastructure, 64% of management teams believe what they already have in place is sufficient for their future plans, however, 18% recognise a need for support in this area, and this may become an issue for more businesses as the sector continues to adapt.”

He concluded: “18% of respondents have invested in IT skills training to help their employees feel comfortable with this new way of working. In addition, more than a third of those questioned are planning to offer mental health awareness support/training to their workforce.

“This shows that manufacturers understand the impact Covid-19 may have had on employee welfare and are prepared to support their staff in this area.”

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