Post-Covid boom expected UK subcontractors report positive outlook
The UK’s subcontract manufacturing sector appears to have weathered the Covid storm and is emerging from lockdown with exceptionally strong sales pipelines, according to a cross-section of the industry’s leaders.
The positive outlook of UK subcontractors is leading many to accelerated investment plans and conversely, leading to increasing concerns about the robustness of supply chains and skills availability.
Chris Shield, Director of Shield Group, a provider of machining and assembly solutions to the power generation, off-highway, construction and automotive industries, with facilities across the Midlands and North of England says the business outlook is very positive. “The pipeline is very strong and we’re feeling a lot more positive compared to six months ago now that the situation with regards to Covid and Brexit is clearer,” says Chris. “It makes us more confident about investing further.” Shield says Brexit uncertainty was a drag on the business, but since the turn of the year the outlook is much more positive. “Up until the 1st of January the uncertainty was a real negative, however European customers are now viewing the UK as a good source and we are seeing many more enquiries and interest. Our only concerns are finding people with the right skills and the capacity of the foundry supply chain to get us the raw materials.”
Shield’ sentiments are echoed by Andrew Whitham of Brooks, a Manchester-based subcontract manufacturer of gears, sprockets, shafts and adapted transmission chains, is typical of the positive mood that is surrounding UK manufacturing: “We’ve enjoyed a period of sustained growth and investment despite the challenges of Covid and lockdowns,” he says. “Our key industry sectors are growing and our investment strategy has just about been able to keep up with the increased demand. The sales pipeline is very strong and our only concern is finding the right skills for our business and the robustness of the supply chain.”
Andrew believes that the decision to continue with investment in new technology has been pivotal to the company’s success. “We’ve spent more in the last twelve months than at any other point in the company’s history, well over £ 1,000,000. We firmly believe one of the factors behind our increased turnover has been our willingness to invest in new machinery and technology.”
John Hyde of John Hyde Engineering, a Stoke-on-Trent-based subcontract machining and production engineering services provider to some of the world's biggest names in plant, machinery, earth moving, and engine building, is also increasingly optimistic: “We’re more positive than six months ago and the pipeline is looking increasingly strong,” says John. “We’re benefiting from some reshoring of operations back to the UK, but finding CNC machinists with the necessary skills and sourcing raw materials are a challenge.”
Alan Mucklow, Managing Director UK and Ireland Sales and Service at Yamazaki Mazak, says the optimism of the subcontracting sector is a much-needed boost for UK manufacturing. “The subcontracting sector, one of the backbones of UK manufacturing, has largely weathered the Covid storm. It is very striking when I talk to customers how positive the outlook is, particularly the strength of the new business pipeline.”
He continued: “I’ve been particularly impressed by the continued willingness to invest in new technology which has put many subcontractors in a very strong position to take advantage of any upturn. With the announcement of the Capital Allowance Super Deduction announced in the Budget, which effectively offers a 25p reduction in Corporation Tax for every pound invested in machines, I would expect this commitment to investment to accelerate further. Coupled with the increased certainty with regard to our trading relationship with Europe and with Covid in retreat, the future looks very positive.”