Around one in four UK manufacturing firms plans to slash jobs this year as they struggle to survive the coronavirus crisis, according to a new survey.
Stephen Phibson, chief executive of manufacturers’ organisation Make UK, told a select committee of MPs on Thursday that redundancies were likely across the sector.
He said evidence from thousands of firms surveyed indicated low levels of demand among customers, despite a gradual government easing of lockdown rules and production lines restarting with social distancing measures.
Phipson told a hearing on the impact of COVID-19 on manufacturing that “around 25%” of surveyed firms said they were “planning to make redundancies in the next few months.” Make UK represents more than 20,000 firms in industries across the UK.
“The really worrying thing is that we’re not seeing anything like a return to demand across all sectors, with the exception perhaps of food and drink and pharmaceuticals,” he said.
Several industry leaders told the committee firms had begun to successfully restart production and reassured staff that new social distancing policies were safe.
Phipson said many manufacturers had been “quite good” in involving staff in risk assessments. He also praised the government’s bounce-back loans and coronavirus business interruption loan scheme (CBILS) as “well appreciated” in helping firms through stoppages and collapsing order books.
Capacity has begun to increase, but demand now appears to pose the major problem for many firms.
Earlier this week Make UK’s chief economist Seamus Nevin warned: “UK manufacturing performance is continuing to delve depths unseen outside of the current pandemic with the rates of contraction in orders, output, and exports last month all among the worst in history.”
The trade body has called for more direct government support for firms in ‘strategic’ sectors.
Mike Hawes, chief executive of the Society of Motor Manufacturers & Traders (SMMT) told MPs capacity with social distancing rules in place remained a constraint on production however.
He said some firms normally produced a vehicle every 55 seconds. “You can’t do that while maintaining two-metre social distancing. We’ll probably lose around 200,000 units of production this year, that’s worth about £12.5bn.”