Market News Saving jobs in manufacturing
Extending the furlough scheme and giving companies more flexibility could save thousands of manufacturing jobs.
The Confederation of British Metalforming (CBM) made the plea to Government after a survey of its 200-strong membership base raised concerns about the time taken for the economy to recover from Covid-19 and the need to have further financial support in place whilst volumes increase.
The UK’s trade body for manufacturers of fasteners, forgings, pressings, cold-rolled and sheet metal products found that its members were predicting to cut up to 30 % of jobs if assistance was taken away at the end of June, which could be a staggering 12,000 positions.
Bosses believe that an extension of the job retention scheme will give them much-needed breathing space and remove the need for them to take immediate decisions on letting some of their employees go.
Steve Morley, President of the CBM, commented: “Whilst there was some optimism in manufacturing prior to Covid-19, the sector had suffered from lack of investment throughout the insecurity caused by Brexit. So, whilst our members are all hoping for an immediate bounce back in the economy, the reality is that volumes will increase at a much slower rate and industry will need help to protect workers in the meantime.
“Feedback from our members has been built into a new proposal, which highlights an extension to the furlough scheme and additional flexibility that companies can recall staff before the three weeks are over in light of sudden upturns in activity.
“Our members range from SMEs to large companies supplying direct to OEMs and their day-to-day requirements will differ. The smaller firms may need to call employees in daily if they get new orders, whilst the larger companies — working off schedules — may be faced with having to employ short-time working, possibly 3-day weeks instead of five. These different scenarios will all need to be covered by the Government’s scheme.”
He continued: “If the Chancellor listens to this, our firms would expect the need to make redundancies to drop from 30 % to just 10 %.”
Trade credit insurance is proving another major issue for manufacturers, with cover being reduced or taken away altogether.
This is impacting a good number of CBM members, who use invoice discounting to draw down money as soon as they raise an invoice. In some instances, this could be 100 %, but with credit insurance reduced, it means that this could now be as little as 25 %, causing a major hammer blow to company cashflows.
There is also still plenty of concern around access to the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) and the reluctance of banks to back viable firms, leaving many looking for alternative financial support.
“This remains one of our biggest challenges — the restrictions placed on banks are not covering those larger SMEs as the Bounce Back loans have done. The liquidity test for CBILS needs to be less restrictive, after all there is an argument that if you’ve survived 3 years of Brexit uncertainty, you are a viable business,” added Geraldine Bolton, Chief Executive Officer of the CBM.
“Covid-19 has created unprecedented economic circumstances for our members and we have been trying to guide them through these difficult times by giving them a collective voice and route into decision makers within the Government.
“What has worked really well is our regular weekly calls with officials from the Department for Business, Energy and Industrial Strategy (BEIS), which has firstly allowed us to understand the support on offer and, secondly, given us a perfect vehicle for making sure our members’ concerns are heard.”
She concluded: “This has been ably supported by strong relationships with CBI, Make UK and SMMT, who all share our passion and commitment to give industry the best possible chance to recover from Covid-19.”