Supply-chain disruptions stall subcontracting growth in the UK

Contract Manufacturing Index Supply-chain disruptions stall subcontracting growth in the UK

14.10.2021Editor: MA Alexander Stark

UK — The latest Contract Manufacturing Index in the UK shows that the subcontracting market grew strongly in July and August but fell back in September amid concerns over material, staff and transport shortages.

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The Contract Manufacturing Index in the UK reflects underpinnings of a sound recovery in the market being held back by uncertainty caused by supply chain issues.
(Source: Public Domain / Pixabay )

The supply chain disruptions faced by British manufacturers mean that suppliers were unwilling to quote without knowing what their costs would be, while buyers are hesitant about placing orders due to uncertainty over demand and pricing.

Accordingly, the Contract Manufacturing Index for the third quarter of 2021 stood at 117, a 52 percent increase on the previous quarter and just slightly (five percent) down on the equivalent quarter in 2020 when the market bounced back after the first Covid-19 lockdown.

The strong growth in July and August followed by a falling back in September mirrored the results seen last year. The CMI of 78 for September was comparable with the overall CMI of 77 for the second quarter of this year.

The Contract Manufacturing Index shows the value of the market for contract and subcontract manufacturing services for machining, fabrication and other processes.
(Source: Qimtek)

The CMI is produced by sourcing specialist Qimtek and reflects the total purchasing budget for outsourced manufacturing of companies looking to place business in any given month. This represents a sample of over 4,000 companies who could be placing business that together have a purchasing budget of more than £ 3.4 bn and a supplier base of over 7,000 companies with a verified turnover in excess of £ 25 bn.

The baseline for the index is 100, which represents the average size of the subcontract manufacturing market between 2014 and 2018.

The strongest sector in the third quarter was Industrial Machinery, which was up by more than 150 percent on the previous quarter. Construction and Construction Equipment also saw strong growth as did Consumer Products and the Food and Beverage Sector.

Conversely, demand dropped significantly in the Electronics, Furniture and Agricultural Sectors.

In terms of process, fabrication accounted for 53 percent of the market (47 percent in Q2), while machining dropped to 36 percent of the market (44 percent in Q2).

Other processes, including moulding and contract electronic manufacturing, accounted for the remaining 11 percent.”

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