Senior executives at the manufacturers’ organisation, Make UK, echo the chief executive of the Road Haulage Association in saying many UK firms are in a battle for survival. Tony McDonough reports
Manufacturing output in the UK is delving to “depths unseen”, with many companies being driven to the “cliff edge” by the coronavirus crisis.
That is the view of both the chief executive and and chief economist of the manufacturers’ organisation, Make UK, which says many businesses may not survive without direct Government intervention.
It echoes the view put forward last week by Richard Burnett, chief executive of the Road Haulage Association, who told an audience of Merseyside business leaders that the COVID-19 lockdown had “decimated” large parts of his sector.
With the hospitality and tourism sectors now set to remain depressed for some time, the Government is banking on a manufacturing resurgence to drive the recovery. But that ambition looks increasingly over optimistic.
On Monday, the latest IHS Markit/CIPS Purchasing Managers’ Index (PMI) for the manufacturing sector gave a reading of 40.7 for May. This was up from April’s record low of 32.6, suggesting the sector was not declining as quickly as before. Anything below 50 indicates contraction.
However, Make UK chief executive Stephen Phipson said: “We are now in such uncharted territory that what would until recently been thought of as unthinkable is now very much the reality.
“While the support schemes in operation are providing significant support to the economy, there are some sectors and companies who are fundamentally sound businesses and were trading positively before the pandemic.
“Instead, however, they have now been driven to the cliff edge by the nature of this crisis and may not survive without direct Government intervention.”
His thoughts were echoed by his colleague, Make UK chief economist, Seamus Nevin, who said the rates of contraction in orders, output, and exports last month were among the worst in history.
Mr Nevin added: “Employment is also falling rapidly and it is now vital that Government works with industry to establish a National Skills Force to retain key talent in the sector. In addition, given the extent of the damage to date direct financial support should be provided to manufacturers in key strategic sectors to protect vital supply chains across all regions of the UK.”