The future of the UK manufacturing sector: surviving in the new reality
06 November 2020
Data analysis of the impact of COVID-19, actions for recovery and cash management
Many UK manufacturing companies have been impacted by COVID-19 and have implemented short-term actions to reduce costs as turnover has fallen. As the recovery to pre COVID-19 volumes is likely to be protracted for many manufacturing sub-sectors, medium to long-term actions are now being implemented to refocus businesses, preserve cash flow and improve balance sheet strength. BDO's support to UK manufacturing clients is considerable, through a diverse range of work we have a deep understanding of their needs and issues. To further this knowledge, our colleagues in BDO LLP recently surveyed a number of UK manufacturing companies to understand what actions they have been taking for recovery.
The data analysis findings summarises the results of the survey. It identifies the percentage of manufacturing businesses that have been materially affected and the short-term actions they have implemented such as cost reduction and securing additional finance to mitigate the increased risks. It provides insight into the most popular medium to long-term actions and alarmingly how many small to medium sized businesses are concerned that they will run out of cash by the end of 2021. Where appropriate the survey data is broken down by company size and manufacturing sector.
As a result of difficulties management teams face, such as managing stakeholders expectations with having to deal with multiple events concurrently to keep businesses operating safely, the article concludes by offering some useful approaches we are currently employing to help our clients.
"Over 80% of transport businesses surveyed, which includes the Civil Aviation and Automotive sub-sectors, have been materially impacted."
You may also be interested in the Q3 Make UK / BDO Manufacturing outlook Report which considers what manufacturing sectors would be at risk of a significant number of businesses failing, based on historically low levels of sector profitability and recovery time to pre COVID-19 production volumes.
If you would like to discuss any of the findings in the article please contact Brian Murphy or Michael Jennings.