Restarting manufacturing after Coronavirus won’t be easy warns industry

CBI Manufacturing trends survey

Restarting UK manufacturing will not be as simple as switching on the electrical supply and pushing the green button, sector leaders warn, following a national video conference hosted by national audit, tax, advisory and risk firm Crowe which was attended by manufacturers, members’ organisations and industry consultants.

Johnathan Dudley, Crowe’s National Head of Manufacturing, said “One of the key issues raised on the call, was that business is not simply going to go from standstill to 100% of previous production overnight. Many major companies such as JLR may start back at, say, 30% of previous capacity while they deploy and sell previously produced stock. This has massive implications for Original Equipment Manufacturers (OEMs) and their relationship with their supply chains.”

In order to tackle this key issue, Crowe will publish a “Getting Back on Track” guide in the coming weeks, which is designed to help manufacturers and their suppliers plot their route back into production.

The guide will highlight the three key stages that businesses have to address. Stabilisation, followed by a commercial “health check” and finally, how to trade successfully in the “new normal, post COVID-19 era”.

Concern was also expressed on the likely impact on employment if production trickles back, rather that starting up at previous levels.

With major businesses, such as airlines, laying off as much as 30% of staff, there are very real implications for the supply chain in the aerospace industry as orders dry up, due to airlines deploying aircraft from routes they have given up, or vastly reduced schedules.

Jonathan said: “I, along with others, have been in regular dialogue with officials at the Department of Business, Energy & Industrial Strategy, calling for the Coronavirus Job Retention Scheme (CJRS) to be more flexible and extended if we are to avoid wholesale job losses.”

One senior industry figure commented: “The true cost of starting up manufacturing again cannot be underestimated and will have massive implications for cashflow and any future investment potential.”

The impact remote working is having and will continue to have moving forward had been previously highlighted by the industry, with many people believing that we may never see the same numbers of staff working in offices again, as remote working has forced employees to learn new ways of working and communicating, in many cases, with little impact, if any, on productivity.

Regional and board meetings by video would have tremendous implications for travel, hotel and restaurant costs, as more and more executives choose to communicate online rather than jump on a train, a plane or the motorway. Similarly, office space requirements could also come under the microscope in the future.

Ross Prince, partner at Crowe, said that while space planning under COVID-19 would have to encompass social distancing with health and safety issues, it was important that current requirements did not affect the long term efficiency of the business and were flexible and reversible where required.

Dudley summed the mood of the conference by saying: “We may not yet know what the ‘new normal’ will ultimately look like, but we do know that the way we do business is changing irreversibly.

“Manufacturers, more than ever before, will have to be innovative and light on their feet if they are to survive first and prosper going forward in this new industrial age we are entering.

“There is a fundamental need for the level of financial help for companies to be at a level that not only supports survival, but also enables them to trade forward and invest in the future.”