Coronavirus update: Two more surveys reveal looming job cuts and massive falls in confidence

May 3, 2020

The devastating impact of the coronavirus pandemic on businesses in the West of England has been highlighted again in the results of two more surveys this week – with one showing two-thirds of firms suffered a fall in orders while the second reveals productivity is down at 80% of the region’s small manufacturers.

Unsurprisingly, confidence levels have slumped to an all-time low and more than half the manufacturers expect to have to cut jobs over the next six months. 

The two surveys – from Lloyds Commercial Banking and the South West Manufacturing Advisory Service (SWMAS) – follow an equally gloomy one two weeks ago from Business West, which runs the Swindon & Wiltshire Initiative.

It warned that many of the region’s firms were “staring into the abyss” with fewer than one in six saying the would be able to cope if the coronavirus crisis lasts for more than six months.

The monthly Lloyds’ Business Barometer shows that overall confidence among firms in the region tumbled by 51 points over the past month to a level of minus 35%. At the same time firms’ confidence in their own business prospects was minus 40%, compared with plus 16% just a month ago.

These findings put the region among the gloomiest in the UK in contrast to its traditional position as one of the most optimistic.

The survey results also showed that just over a third of firms were operating at below half capacity, with 67% reporting a negative impact on demand because of Covid-19

In an illustration of the impact of Covid-19 on the region’s business, 67% of firms reported a significant decrease in demand for their goods and services, compared to 13% who saw it rise. One in six (16%) firms hasn’t been operating at all.

Of the 84% of businesses that reported disruption to their supply chain during April, a third expected the situation to improve within six months, but 8% expected it would take more than 12 months to return to normal.

Lloyds Bank Commercial Banking  South West regional director David Beaumont, pictured, said: “Businesses in the South West, an area that usually benefits from being one of the country’s tourism hotspots, reported one of the lowest levels of confidence in the UK during April. 

“We’re working alongside the regions firms to ensure they have the finance needed to weather current challenges, including £2bn of arrangement fee-free finances, and capital repayment holidays on loans for those that have been severely affected.”

The quarterly SWMAS South West Manufacturing Barometer reveals a stark picture of how coronavirus is affecting industrial confidence and future predictions around safeguarding jobs across the region.

It shows that more than eight in 10 small manufacturers expect sales to drop over the next six months, while 80% had experienced a fall in production volumes since the Covid-19 forced the UK into lockdown.

Some 54% believe they will need to cut jobs in the next half-year, despite the rollout of the government’s business support package, which includes access to grants and its furloughing scheme to boost employee retention.

Almost half of firms – 49% – are expecting to reduce investment in plant and machinery over the next six months. In contrast, just 10% were planning to lower their spend in these areas in the last Barometer in January. In fact, 54% were planning future investment at the beginning of this year.

The Manufacturing Barometer also shows that more than 85% of SME manufacturers in the South West have seen an impact on staff attendance due to the Coronavirus outbreak, while more than eight out of 10 say their supply chains have also been affected.

SWMAS managing director Simon Howes, pictured, said: “Covid-19 is having a huge impact across the region’s economy but it is particularly problematic for our sector as manufacturing cannot be carried out remotely, relying as it does on physical interaction with machinery and parts. 

“Current restrictions and the ongoing lockdown measures mean that capacity is reduced, so therefore the vast majority of South West businesses surveyed have reported a fall in production volumes.

“Some 80% of the firms who responded also told us that financial support is what they need most to survive the crisis, with only 19% believing that the government is doing enough to help the sector to cope with the pandemic.

“Meanwhile 17% of firms highlight the need for both supply chain support and help with risk management and strategic planning.

“Top of the support wish list for SME manufacturers is financial assistance and for the government to go ‘faster and further.’ Although the existing package of measures has been welcomed, there remains a pressing need for a deeper level of sector-specific advice and support.

“SME manufacturing must be protected now to ensure it is ready to spring back into action once the Covid-19 crisis is finally over. The Covid-19 pandemic has also brought home how reliant we have become on overseas supply of strategically critical important items. We must learn from this and re-establish UK production.”

The findings from the latest Barometer are a huge contrast to the previous quarter results which showed that confidence among the South West’s small and medium-sized manufacturers had bounced back following the breaking of the Brexit impasse following December’s General Election.     




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