Business West’s latest quarterly economic survey has found that 70% of manufacturing businesses across the South West are concerned about the disruption to supply chains will continue into 2022.
Close to 350 businesses took part in Business West’s most recent survey of business conditions in the South West, with the findings showing overwhelming concern amongst the business community about input and stock availability.
The results come as several reports have emerged that UK economic growth is slowing due to global scarcity of materials, staff shortages exacerbated by Brexit, and transport delays occurring simultaneously due to an increase in demand.
The survey found that 77% of manufacturers quizzed have suffered delays or other disruptions when importing supplies or goods, while 66% of all importing businesses have been affected. Common issues faced include delays of up to 12 weeks or more for deliveries from Europe and Asia, shortages of materials such as steel and wood, exponential price increases of shipping containers, and UK based companies being dropped by EU suppliers.
BK Grain Handling Engineers based in Malborough in Wiltshire has been affected by shortages of materials due to import and export delays. Stuart Dennis, Director at the company said:
“We have struggled with steel, cement and wood shortages all year. Inflation makes it hard to quote for work, and we continually have to increase prices during planning and evaluation processes.”
Lye Cross Farm based in Redhill in North Somerset has been affected by the delays to exports. Ben Hutchins, Sales and Marketing Director at the company said:
“Delays for shipments to the EU cost up to €1000 per day. Sometimes these delays can be due to errors by border staff, IT failures, lack of border staff, or even a small paperwork error.”
Stanilod Group Ltd based in Cheltenham in Gloucestershire are facing increased costs due to the disruptions. Nick Barnes, the company’s Managing Director, said:
“Our freight costs have increased more than tenfold, adding 6% to our core costs.
“Recruitment and wage expectations have also risen considerably which is putting pressure on us into 2022.”
More than half (55%) of respondents have been impacted by the national and global supply chain issues since the start of the year. Higher still is the proportion of respondents in the manufacturing sector who say this has been a persistent issue; 82% of manufacturing businesses have been impacted by the national and global supply chain issues since January 2021.
A third of manufacturers said that the supply chain disruptions affecting their business activity has deteriorated since the summer, while 39% indicate that the issues persist but have not been aggravated.
Despite the uncertainties and difficulties linked to Covid-19 and Brexit, 2021 has been a year of recovery for the domestic market. 38% of respondents have increased their domestic sales during the past 3 months, closing the year with an uptick trend in net UK sales and orders.
While businesses are clearly facing a myriad of hurdles both in the short and long-term, 35% of survey participants are confident about the prospects of the UK economy for the next 12 months. Confidence in their own business maintains the positive outlook started with the vaccine rollout and economic reopening, with 62% of respondents confident about their own business performance for the next year.
However, with the new customs checks in January 2022, businesses will need to ensure they are prepared to avoid unnecessary delays and extra costs.
During 2021, importers of goods from the EU into Great Britain had the option of delaying submissions of customs declarations, however from 1 January 2022, full customs entries must be submitted. Ports and other border locations will also introduce customs controls on goods moving into Great Britain from the EU and firms will also need to provide a declaration to confirm a good’s origin at the time they export the goods. Firms can find out about the export support available on our site or telephone 01725 370712.
Business West Managing Director Phil Smith comments:
“The survey results from the fourth quarter of the year have shown that despite businesses’ economic recovery and progress following the challenges of the past two years, hurdles still remain for the business community.
“It is troubling to see the difficulties businesses in the manufacturing sector are facing, particularly during what should be a profitable time for firms. The challenges caused by disrupted supply chains must be addressed to keep businesses on an upward trajectory after a promising start this time last year.”