Manufacturing News

Manufacturers moving supplier bases back to UK in wake of Brexit could create opportunities, report finds

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Written by: Hannah Baker | Posted 11 March 2019 16:34

Manufacturers moving supplier bases back to UK in wake of Brexit could create opportunities, report finds

Plans by South West manufactuers to move supplier bases out of the EU ahead of Brexit could create vital opportunities for the region, according to a report.

The SWMAS Manufacturing Barometer found that 16 per cent of the region's SME manufacturers are now looking for suppliers in the UK to replace those currently sourced in the EU, while five per cent are considering moving supply now sourced outside the EU to the UK.

Simon Howes, CEO of Exelin Group, said: “The desire to source new domestic suppliers indicates UK SME manufacturers are nervous about securing supplies post-Brexit, but this could provide a short to medium-term boost for UK businesses if they can meet this need.

“This comes at a time when companies like Honda say they are moving production out of the UK, a move which will negatively affect their supply chain and create a hole in forward orders.

"Our research shows a much-needed chink of light with new opportunities coming to the market.”

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The Manufacturing Barometer also explored manufacturers’ specific plans to stockpile – an intention that first came to light in the previous Manufacturing Barometer.

Amidst the continued Brexit uncertainty, more than two thirds (71 per cent) said they were using cash reserves to buy up and store raw materials and components.

“Stockpiling looks to be a popular strategy to try to head off Brexit uncertainty, but it is creating its own issues, including impacts to cashflow and reports of some suppliers’ stock levels running low,” added Simon.

Although manufacturers across the South West reported an increase in the number of staff in the last six months, the number who have experienced an increase in sales has dropped to 51 per cent.

Projections for the next six months are also at a much lower level than this time a year ago and although some manufacturers indicate a desire to invest in their businesses, many continue to hold off.

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Just 41 per cent expect to invest in new machinery or premises - 17 per cent down on the corresponding quarter in 2017.

Simon added: “Turnover is down compared to this time last year and this is being driven by a lack of clarity on future trading conditions and uncertainty over customer demand.

“As we head into the final weeks before the scheduled Brexit date South West manufacturers are doing what they can to adapt their businesses.

“Brexit is clearly amplifying the pressures manufacturers have to manage and whilst SMEs can be more agile they also have fewer resources to navigate and manage change.

“Our SME manufacturers need support at this vital time to ensure they remain competitive, that any business casualties are minimised and that they have the resources to grasp any emerging opportunities.”

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