With the country now emerging from the pandemic, manufacturing businesses are anticipating a healthier, more productive future. However, other factors, such as fallout from Brexit – have yet to fully subside, with a shortage in the supply of labour threatening to place a ceiling on recovery and growth.
So, what’s the current picture facing manufacturing SMEs in the UK?
UK SME Manufacturing: Held Back By Stunted Growth
A recent poll of over 400 manufacturing SMEs revealed the following statistics:
- Two-thirds of SMEs are expecting to experience growth in the first half of 2022.
- Just over half (52 per cent) of manufacturing SMEs plan to invest in capital equipment.
- Compared to the pre-pandemic period, more SMEs are now trading at increased levels.
However, significant disruption continues to affect manufacturing SMEs, with 60 per cent reporting that additional time is required to liaise with suppliers, and many are increasing product prices to cover their additional costs.
The manufacturing industry has demonstrated its resilience in the past two years, particularly in its ability to adapt to respond to the Ventilator challenge as well as cope with difficult market conditions.
Innovation has been at the heart of many SMEs’ survival through lean times, yet significant difficulties still lie ahead, including:
- Extended lead times.
- Logistics costs.
- Disruption to supply chains.
- Shortages of raw materials.
- High energy costs.
- Labour shortages.
For manufacturers, this potent combination of troubles threatens to undermine their profits, even if, as expected, sales figures remain high. Supply chain problems mean businesses may have to input more resources to maintain their current lead times, which can damage profits and result in higher product prices for customers. Some manufacturing companies are committing two full-time employees to simply manage supplies and customer enquiries. For an SME, this could involve up to 10 per cent of its workforce.
The Shadow Of High Wage Demands
While labour and skills shortages are one of the main causes of staffing problems in manufacturing SMEs, high wages are also cited as a factor.
Nearly 60 per cent of SME owners say they are having to increase wages to ensure they can access skilled talent as other employers seek to appoint new staff from the same limited recruitment pool. Higher wages, enhanced professional development, and flexible working options meet employees’ expectations but increase overall costs to SMEs overall.
Safeguarding Manufacturing In The UK
Manufacturing in the UK is in a strong position given the upheaval of the last two years, but expected growth needs to be protected to prevent costs from undermining the recovery.
Challenges remain, so decisive action in the form of workable apprenticeship schemes, training tax incentives, assistance with research and development costs, and a visible campaign to encourage UK customers to ‘Buy British’ would all offer support to a hard-pressed industry.
How Outsourcing To Hone-All Can Help Address Your Labour Shortages
If you are a manufacturing SME and you’re facing a problematic labour shortage, talk to the experts at Hone-All today. We can help you futureproof your business by ensuring you receive high-quality components manufactured from the finest raw materials. When you’re short on staff and / or capacity, we can help you meet your customer deadlines and maintain your reputation for quality.
To find out more about our services or to request a quotation for your next project, please call us on 01525 370666 or send us a message.